Amwill Health Care Ltd. IPO: Key Details

Amwill Healthcare

• Amwill Healthcare is coming out with an initial public offering (IPO) of 54,03,600 equity shares in a price band Rs 105-111 per equity share.
• The issue will open on February 5, 2025 and will close on February 7, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 10.50 times of its face value on the lower side and 11.10 times on the higher side.
• Book running lead manager to the issue is Unistone Capital.
• Compliance Officer for the issue is Sapna Parmar. 

Profile of the company

Amwill Healthcare is a derma-cosmetic development company, associated with contract manufacturers, distributor and third party product development agencies, which has enabled it in developing capabilities, in manufacturing, packaging and distribution. The core focus of the company is on development of problem solving dermatological, cosmeceutical and aesthetical products, and therefore to direct all its efforts towards product formulation and development, it has outsourced key functions such as manufacturing, prototype development and distribution to third parties, for effective management and execution. In line of the aforementioned business strategy, it has presently created a business presence in Karnataka, Andhra Pradesh and Telangana, wherein it focuses on deepening its presence in the regions it operates in, before venturing into new markets, thereby enabling it to establish a customer base in such states. This enables the target customers to identify with its product portfolio and aids its understanding of the market segment and the customer demand preference.

The product portfolio of the company is divided into two categories, namely, (i) development and contract manufacturing of generic dermatological solutions; and (ii) developing and formulating solutions to specific dermatological problem. Majority of the products marketed by it, were developed by its Promoter and Managing Director, Anand Gandhi, in the capacity of a sole proprietor of M/s. Amwill Healthcare. Since incorporation, the company has developed seven new products, namely proputor tabs, XL hydra cream, ozederm cream, PD-pill 10 tablets, XL aqua moisturising lotion, ultra kromaglo effervescent tablets and depimed ultra cream. Out of these products, the company did not receive a positive response for PD -pill 10 tablets, proputor tabs and ozederm cream and therefore has discontinued former two products.

Since inception, the company’s focus has been on developing formulations which offer solutions to various dermatological disorders. Owing to the longstanding experience of its promoters in the dermatological industry, its Promoters have remained in constant touch with various dermatologists and medical professionals. Due to its ongoing professional relationship with such dermatologists and medical professionals, it has been able to leverage their experience, while developing its products. The company during the ordinary course of business, seeks advice from various dermatologists and medical professionals, to develop solutions for various dermatological problems. The dermatologists, assist and advise the company in identifying the gaps in skincare or cosmetic market, through their experience. The company based on such suggestions identifies a dermatological problem and develops a formulation of a derma-cosmetic suitable for addressing the designated problem.

Proceed is being used for:

• Funding of working capital requirements of the company
• Marketing and brand building activities
• General corporate purposes

Industry Overview

India’s $14 billion beauty and personal care industry is on a roll thanks to online sales of beauty products, premiumisation, and an inclination towards organic and ethical brands. Last year, with the presence of online retailers like Nykaa.com and Amazon.com, the beauty and personal care products category crossed $400 million in internet sales up from $100 million in 2014. The high penetration of smartphones and easy access to the internet that exists on the fingertips of 560 million Indians (TRAI data for September 2018) today is driving the continued rise of the beauty and personal care industry in the country. With the number of internet users in the country expected to cross Europe’s population by 2025, it is no surprise that the beauty and personal care industry is enjoying rapid growth, accelerated by an increase in internet retailing.

The beauty industry in India will experience growth in the upcoming years. The passion for skincare and beauty among Generation Z has over time changed this business. With full access to social media to communicate their demands and obtain the goods and services they want; Gen Z is significantly more demanding in terms of goods and services. This is making it more difficult for all the beauty brands to compete and succeed. The COVID era has seen the industry shifting from offiine stores to online sites leading to discontinuation of the premium products. Offering customised products could assist businesses in drawing in more clients because consumers are more likely to buy from companies that will meet their needs and supply goods that match their preferences. Customers frequently favour firms that can deliver the same services to them at home or that can create products specifically for them.

The cosmetic industry in India has emerged as a luminous gem in the country's economic landscape. The Indian cosmetic industry has embarked on a stellar trajectory, defying conventional norms and products with a stable market value of over $3 billion. These items show the highest level of resistance to the pandemic epidemic, the financial hardships brought on by domestic limitations, and months of a blockade. The categories most impacted by social interaction and living away from home were makeup products that block sunlight, as well as fragrances. This growth can be attributed to several key factors. Chief among them is the changing consumer landscape in India. As incomes rise and urbanization spreads its wings. Indian consumers are increasingly discerning and quality-conscious. The demand for cosmetics and personal care products is on the rise, and this trend is set to continue in the coming years.

Pros and strengths

Asset-light business model: The company has adopted what has to be a scalable, asset-light and less capital-intensive business outsourcing model, wherein it has outsourced its key business operations, including manufacturing, prototype development, testing and distribution to third parties. This asset light business model, enables it to direct all its efforts towards product formulation, product development, marketing and sales. Further, while it focuses on product development, by outsourcing key business functions it has created mutually advantageous partnerships that allow all parties to focus and manage the capabilities they are best at, in a business’s ecosystem. It has outsourced its manufacturing operations to third party manufacturers, which enables it in providing quality products to its customers, without having to invest in a large amount of fixed assets and thereby reduces its recurring expenses relating to labour cost, raw material cost, manufacturing unit costs, etc.

Extensive product portfolio supported by product formulation capabilities: It is a derma-cosmetic development company with a diversified product portfolio and unique product development model. The company develops products with an intent of (i) offering a higher efficacy through new and advanced generic formulations; and (ii) formulating solutions for specific dermatological problems. Its focused approach towards product development makes its business model and its formulations unique. Its Promoters were earlier associated with M/s. Amwill Healthcare, a sole proprietorship engaged in the business of offering distribution and marketing of pharmaceutical products. Each of its Promoters have a cumulative experience of two decades in the pharmaceutical industry. Owing to the unique approach towards development of derma-cosmetic products, its Promoters have been able to seek guidance and advise of dermatologists on its products which can be developed and the solutions which can be offered in the Indian market.

Provision of high quality product development through tie ups with contract manufacturers and prototype developers: The company constantly strive for a high standard of quality in its products. It associates with prototype developers and contract manufacturers for developing and manufacturing its products. In order to ensure quality of its formulations, it conducts testing of the final product through contract manufacturers to ensure that the formulation contains the desired molecular composition, texture, feel, and fragrance. It also provides the prototype for analysis to its dermatologists to ensure that the products developed are pre-approved and achieve the desired result. Further, it ensures that the contract manufacturers engaged by it follow good manufacturing practices, compliant with regulatory standards in their manufacturing units. It also ensures that the contract manufacturers have the relevant licenses and approvals to undertake manufacturing operations. Prior to accepting delivery of products, its quality team reviews the quality of products and ensures that products meet the pre-determined quality specifications.

Risks and concerns

Geographical constrain: The company’s operations are concentrated in the states of Karnataka, Andhra Pradesh and Telangana. The economic and regulatory conditions in the aforementioned states may be affected by various factors outside its control, including prevailing local, social and economic conditions, changes in the applicable governmental regulations, demographic trends, changes in regulations governing employment of labourers, fluctuation in the income levels and interest rates, among other factors. Further, since its operations are concentrated in the states of Karnataka, Andhra Pradesh and Telangana any political disruption, natural calamities or civil disruptions, opposition and protests, particularly in locations where it operates, could adversely affect its business operations or strategy.

Limited operating and financial history: The company was incorporated on August 21, 2017 and commenced operations in Fiscal 2020. As such, it has a very limited operating history, and its success is dependent on its ability to effectively implement its businesses. The company’s limited financial and operating history may not provide an accurate basis for investors to understand its business and financial history for comparative analysis and evaluate its future business and financial prospects. Assessing the future prospects of its business is challenging in light of both known and unknown risks and difficulties it may encounter, and could place significant demands on the management team and its other resources. It will be subjected to all the business risks and uncertainties associated with setting up any new business venture, which may adversely affect its business, prospects, results of operations and financial condition.

High working capital requirements: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards inventories and trade receivables. Its growing scale and expansion, if any, may result in increase in the quantum of current assets. The company’s inability to maintain sufficient cash flow, credit facility and other sources of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations. Further, it has high outstanding amount due from its debtors which may result in a high risk in case of non-payment by these debtors. In case of any such defaults from its debtors, may affect its business operations and financials. 

Outlook

Amwill Healthcare is a derma-cosmetic development firm that collaborates with contract manufacturers, distributors, and third-party product development agencies. This collaboration has enhanced the company's manufacturing, packaging, and distribution capabilities. The company has provision of high-quality product development through tie-ups with contract manufacturers and prototype developers. On the concern side, the company derives a significant portion of its revenue from certain of its products. If sales volume or price of such products declines in the future, or if it is unable to sell such products for any reason, its business, financial condition, cash flows and results of operations could be adversely affected. Moreover, the company’s operations are concentrated in the states of Karnataka, Andhra Pradesh and Telangana. If revenues from these states decline, its business, results of operations and financial condition would be adversely affected.

The company is coming out with a maiden IPO of 54,03,600 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 105-111 per equity share. The aggregate size of the offer is around Rs 56.74 crore to Rs 59.98 crore based on lower and upper price band respectively. On performance front, the company's revenue from operations the financial year 2023-24 is Rs 4,394.83 lakh. This represents Rs 1,378.20 lakh or 45.69% increase compared to the previous financial year's total income of Rs 3,016.63 lakh. This increase is primarily due to increase in Sales from Skin care of Rs 810.54 lakh, Hair care of Rs 400.49 lakh, Personal care and hygiene of Rs 143.38 lakh and Lip care of Rs 23.79 lakh. Moreover, the Profit After Tax (PAT) for the financial year 2023-24 reached Rs 1,253.63 lakhs, marking a notable increase from Rs 311.44 lakhs in the financial year 2022-23.

The company presently has presence in Karnataka, Andhra Pradesh and Telangana. It is proposing to expand its operations in West Bengal and Odisha, and therefore it has during the year 2024, appointed senior regional sales managers, regional sales managers and sales executives in these states and have commenced marketing operations in these states. The domestic market offers various opportunities in term of sub-geographic penetration and product/ market diversification which it intends to seize and increase its market share by exploring untapped markets and segments by innovating value added products with the help of its product development capabilities, as part of its strategy to widen growth prospects. It shall also continue to explore opportunities in different regions and countries abroad to enhance its geographical reach.