Mr. Hardeep Singh, MD, IKIO Lighting Limited

7 Jun 2023 , 10:26 AM

Can you provide a brief history of the company, including its founding and key milestones?

The company, initially known as ‘IKIO Lighting Private Limited,’ was incorporated on March 21, 2016, under the Companies Act, 2013. Subsequently, it changed its name to ‘IKIO Lighting Limited’ when it was converted into a public company on January 3, 2022. Over the years, we have achieved significant milestones, such as starting the manufacturing of Refrigerator Light in 2016, expanding our business in the Noida Special Economic Zone for 100% export activity in 2019, and acquiring 100% equity shares of IKIO Solutions Private Limited and Fine Technologies (India) Private Limited in 2022. Our company also received the Quality Innovation Award-2022 from The Institute of Engineers (India) – Uttarakhand State Centre Safety & Quality Forum Disaster Awareness & Management forum in the same year.

What is IKIO Lighting’s current market position and how has it evolved over time?

IKIO Lighting aims to enhance its market position through various strategic initiatives. These include expanding into new product lines, increasing manufacturing capacities, diversifying its customer base across different regions, investing in research and development, and emphasizing sustainability through ESG (Environmental, Social, and Governance) investments. We believe that the growing trend of outsourcing and the ODM (Original Design Manufacturer) model presents opportunities for market growth. As the LED lighting market in India continues to develop and consumer demand for energy-efficient solutions increases, IKIO Lighting sees favorable prospects for expansion.

What were the main factors that influenced the decision to go public?

We expect the business to grow significantly in the next 4-5 years. However, the existing capacities at the four locations/facilities were not sufficient to support the expected growth. We could have raised debt to finance the capacity expansion, but the balance sheet couldn’t support a large debt infusion. Hence, we decided to raise equity through the IPO route.

How does the company plan to utilize the funds raised from the IPO?

The funds raised from the IPO will be allocated as follows: Rs. 212.31 crore for setting up a new facility in Noida and Uttar Pradesh, investment in its subsidiary IKIO Solutions Private Limited, Rs. 50 crore for repayment/prepayment of certain borrowings, and general corporate purposes.

What are the key growth opportunities that the company aims to pursue?

According to a report by Frost & Sullivan, the Indian LED lighting market is expected to experience significant growth due to factors such as energy efficiency, longer lifespan, and increasing affordability. IKIO Lighting intends to capitalize on this opportunity by offering LED lighting solutions and catering to the demand for home and decorative lighting. We also see potential in the automotive sector with the technological advancements in autonomous cars and the rising electronics content in vehicles. Additionally, the medical devices electronics manufacturing services present a promising revenue opportunity.

Can you discuss the company’s current financial performance and future projections?

In Fiscal 2022, IKIO Lighting achieved significant growth in revenue from operations, which increased by 55.47% compared to Fiscal 2021. This growth can be attributed to the easing of COVID-19 restrictions and the introduction of ABS pipes for export. The company’s profit after tax also rose by 75.37% during this period. Furthermore, IKIO Lighting has the highest return on net worth (RoNW) among its listed peers. We expect a similar trend in the coming year if the situation remains favorable.

What is the company’s competitive advantage or unique selling proposition in the market?

Our ability to provide flexible and cost-effective manufacturing of LED lighting solutions and ABS piping systems. We compete by offering integrated end-to-end lighting solutions and serving as an ODM to customers in India and globally. Our focus is on product and service quality, timely delivery, customer service, regulatory compliance, and cost-effective manufacturing.

What is the company’s strategy for attracting and retaining investors after the IPO?

We intend to maintain the growth trajectory achieved in the last 3-4 years and financial profile. Robust RoCE and free cash flows are important to our growth.