Business Profile of the Ellenbarrie Industrial Gases Limited
Ellenbarrie Industrial Gases with a rich legacy of over 50 years is the largest 100% Indian-owned industrial gases company in terms of installed manufacturing capacity as of FY24. The company manufactures and supplies industrial gases such as oxygen, nitrogen, hydrogen, etc. The company is one of the largest manufacturers of industrial gases in East India and South India, and the market leader in West Bengal, Andhra Pradesh, and Telangana.
They offer turnkey solutions for medical gas pipeline systems and provide products and medical equipment to healthcare facilities. The company is present across multiple modalities of supply, including onsite, bulk, and packaged, and has a robust distribution network. The company's portfolio of industrial and medical gases serves critical functions across industries for public and private entities, including steel, pharmaceuticals, chemicals, healthcare, aviation, aerospace, etc.
In Fiscal 2024, the company sold its products to 1,836 customers, with long-standing relationships with top five and 10 customers. The company's revenue from operations from customers with whom they had a relationship of over 10 years was 43.60% in FY24.
Ellenbarrie Industrial Gases Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to 14,427,620 Equity Shares aggregating up to Rs. XXXX million. Nothing from those proceeds of OFS will be allotted to company.
- Ellenbarrie Industrial Gases IPO offer only has fresh issue of Rs. 4, 000 million. As per filings document, the company aims to utilize IPO proceedings towards repayment of certain outstanding borrowing and for setting up an air separation unit at Uluberia-II plant.
| Particulars | Estimated Amount |
| Payment of certain outstanding borrowings availed by Company | 1768.98 |
| Setting up of an air separation unit at Uluberia-II plant | 1300 |
| General corporate purposes | XXXX |
| Total | XXXX |
(₹ million)
IPO Details of Ellenbarrie Industrial Gases Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹2 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity Shares |
| Aggregating up to ₹ XXXX million | |
| Fresh Issue | XXXX Equity Shares |
| Aggregating up to ₹ 4,000 million | |
| Offer For Sale | Up to 14,427,620 Equity Shares |
| Aggregating up to ₹ XXXX million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Ellenbarrie Industrial Gases Limited IPO
The issue price of Ellenbarrie Industrial Gases Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 400 crores as well as offer for sale of Up to 14,427,620 Equity Shares.
Launch Date of Ellenbarrie Industrial Gases Limited IPO
The IPO opening date of Ellenbarrie Industrial Gases hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Ellenbarrie Industrial Gases Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| INCOME | |||
| Revenue from operations | 2694.75 | 2051.07 | 2445.76 |
| Other income | 207.28 | 186.03 | 113.27 |
| Total Income | 2902.03 | 2237.1 | 2559.03 |
| EXPENSES | |||
| Cost of materials consumed | 38.28 | 41.14 | 36.56 |
| Purchase of stock-in-trade | 533.77 | 222.23 | 343.84 |
| Changes in inventories of finished
goods & stock-in-trade |
-23.18 | -4.58 | -32.34 |
| Power expenses | 776.62 | 739.73 | 637.4 |
| Employee benefits expense | 160.56 | 144.05 | 130.01 |
| Finance costs | 80.27 | 35.48 | 45.28 |
| Depreciation and amortization expense | 100.13 | 113.79 | 115.28 |
| Other expenses | 593.4 | 572.62 | 525.7 |
| Total expenses | 2259.85 | 1864.46 | 1801.73 |
| Profit before Tax | 642.18 | 372.64 | 849.09 |
| Profit for the year | 452.89 | 281.42 | 671.55 |
| Particulars | Ellenbarrie Industrial Gases Limited | Linde India Limited | ||
| FY24 | FY23 | FY24 | FY23 | |
| Revenue from Operations | 2694.75 | 2051.07 | 27686.69 | 31355.2 |
| Revenue from Operations Growth (%) | 31.38 | -16.14 | -11.7 | 48.47 |
| Profit for the year | 452.89 | 281.42 | 4340.86 | 5380.59 |
| Net Cash Generated from Operating
activities (in ₹ millions) |
437.47 | 387.47 | 4369.55 | 6281.84 |
| EBITDA (in ₹ millions) | 615.3 | 335.88 | 7023.23 | 7648.37 |
| EBITDA Margin (%) | 22.83% | 16.38% | 25.37% | 24.39% |
| PAT Margin (%) | 15.61% | 12.58% | 15.25% | 16.61% |
| RoE (%) | 11.05% | 7.75% | 12.52% | 17.14% |
| RoCE (%) | 12.22% | 6.46% | 20.15% | 26.27% |
| Net Debt to Equity Ratio (in times) | 0.03 | -0.05 | -0.28 | -0.38 |
| Gross Fixed Asset Turnover Ratio (in times) | 0.59 | 0.68 | 0.86 | 1.06 |
| Number of Facilities Operated | 8 | 6 | 39 | 35 |
| Number of Facilities under Construction
or Implementation |
2 | 1 | N.A | N.A |
| Total Operational Capacity (Tons per day) | 3691 | 591 | N.A | N.A |
| Capacity under Construction (Tons per day | 390 | 600 | N.A | N.A |
| Number of Bulk Customer Installations | 197 | 176 | N.A | N.A |
Ellenbarrie Industrial Gases Limited Promoters & Shareholding
As of date, there are two promoters of the company.
The promoter in aggregate collectively holds 89.45% of the paid-up share capital of company.
| Name of the Shareholder | No. of Eq. Shares as on the date of this DRHP | % of total pre-Offer paid up equity capital | Max. No. of Eq. Shares offered in the OFS |
| Promoters | |||
| Padam Kumar Agarwala | 8,34,21,440 | 63.71% | 72,13,810 |
| Varun Agarwal | 3,37,05,560 | 25.74% | 72,13,810 |
| Promoter Group | |||
| Shanti Prasad Agarwala | 1,24,38,880 | 9.50% | - |
| Manisha Saraf | 10,000 | 0.01% | - |
| Padam Kumar Agarwala Family Private Trust | 1,000 | Negligible | - |
| Varun Agarwal Family Private Trust | 1,000 | Negligible | - |
Should You Subscribe to Ellenbarrie Industrial Gases Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Swiggy Limited:
Leading Manufacturer of Industrial Gases
The company, established in 1973, is the largest Indian-owned industrial gases company in terms of installed manufacturing capacity and revenues as of FY24. It is a market leader in East India and South India, and the largest manufacturer in West Bengal, Andhra Pradesh, and Telangana. The company's growth is attributed to its ability to compete in an infrastructure-intensive industry and its ability to identify, manufacture, and deliver diverse industrial gases.
Comprehensive Product Portfolio
The company manufactures a variety of industrial gases, including O2, N2, argon, helium, hydrogen, CO2, N2O, and acetylene. They cater to specific requirements in industries such as steel, pharmaceuticals, healthcare, aviation, aerospace, petrochemicals, food and beverages, etc.
They also offer niche products like synthetic air, ultra-high purity nitrogen gas, ultra-high oxygen gas, and liquefied argon gas. They also offer turnkey solutions for medical gas pipeline systems and medical equipment.
| Industry | FY24 | FY23 | FY22 |
| Revenue from sale of gases, related
products and services |
83.93% | 92.28% | 88.35% |
| Revenue from project engineering services | 16.07% | 7.72% | 11.65% |
Long-standing Customer Relationship
Customers are highly selective in selecting new suppliers of gasses because Transitioning to new suppliers is cumbersome both financials and operationally. Thus, the industrial gases industry is characterized by high customer stickiness, particularly for large customers. For package customers, gases such as oxygen and nitrogen are compressed under high pressure into cylinders and transported to them. However, the seamlessness of the supply chain, controlled transportation conditions, familiarity with suppliers, and safety and quality control concerns limit the extent to which customers are willing to switch suppliers of industrial gas. As of March 31, 2024, the company had 1,526 package customers.
As of FY24, the company had 295 bulk customers with an average contractual tenure of five years.
As can be seen from data in table below, the company generates maximum of its revenue from bulk customers. Company’s majority of revenue generation comes from clients that have relationship of more than 5 years.
| Industry | FY24 | FY23 | FY22 |
| % of Rev from Sale of Gases, Related Products and Services | |||
| Revenue from bulk customers | 75.41% | 75.03% | 77.73% |
| Revenue from package customers | 20.20% | 22.26% | 19.90% |
| Revenue from onsite customers | 4.39% | 2.71% | 2.38% |
| Period of Customer Relationship | Percentage of Revenue from Operations (%) | ||
| More than 10 years | 43.60% | 43.16% | 32.60% |
| More than 5 years but less than 10 years | 16.48% | 23.10% | 19.93% |
| Up to five years | 39.92% | 33.74% | 47.47% |
Expansive Operational and Distribution Capabilities
Gas industry is capital intensive industry which also requires specific know how of not only exptractiog but suuppliying those gasses safely. As of FY24, the company is one of the largest manufacturers of industrial gases in East India and South India, with eight facilities across East, South, and Central India. The company operates one of the largest oxygen plants in India, with a capacity of 1,250 TPD.
The company was the first to set up a hydrogen electrolyser in Eastern India and has built efficient distribution networks. They offer products using different supply options based on customer requirements and have a robust distribution network with the third highest number of transport tankers, cylinders, and customer installations in India.
The company also has an in-house projects team of 38 employees, which sets up its facilities using material supplied by original equipment manufacturers. This team enables the company to build deep relationships with customers, customize solutions, and create a knowledge base in-house.
Future strategy
The company plans to expand its portfolio of gases, particularly speciality gases, to cater to new end-use industries and green energy demand. They aim to develop R&D capabilities for green hydrogen and green ammonia, offering a complete range of pure and speciality gases to existing and new customers. They will also focus on providing ultra-high purity and electronic gases and chemicals for electronics and semiconductors, and establishing supply chains and distribution capabilities for these gases. They plan to initiate plant manufacturing operations, leveraging their existing project engineering experience and vendor network.
The company plans to expand its manufacturing capacity and establish a pan-India presence by establishing two expansion projects. The company also plans to expand through a liquid ASU and cylinder filing station in North India and West Bengal.
Risk Factors of Ellenbarrie Industrial Gases Limited:
Client concentration
The company sources its revenue from the sale of gases and project engineering services. The product engineering services includes design, engineering, supply, installation, and commissioning of tonnage air supply units and related projects.
A decrease in business from key customers, due to adverse market conditions or the economic environment, may adversely affect the company's fundamentals, its operations, and companies financial. All top 10 customers are located in East and South India, and due to slowing economy or political developments in these regions may lead to a reduction in the volume of products they source from the company.
| Customer concentration within sale of gases | FY24 | FY23 | FY22 |
| % of Revenue from Sale of gases, related products and services | |||
| Top 1 | 10.84% | 8.35% | 6.55% |
| Top 5 | 29.59% | 26.26% | 19.92% |
| Top 10 | 40.95% | 37.56% | 31.71% |
Unscheduled disruptions in the manufacturing process
As of FY24, the company operates eight facilities across India, including three bulk manufacturing plants, two standalone cylinder filling stations, one onsite facility in Kharagpur, West Bengal, one onsite facility in Nagarnar, Chhattisgarh, and one onsite facility in Kurnool, Andhra Pradesh.
The company is also pursuing two expansion projects, including a new plant in Uluberia, West Bengal, and capacity expansion at existing premises in Kharagpur, West Bengal. The company's business relies on efficient management of its facilities and any unscheduled disruptions in the facility, such as industrial accidents, fire, mechanical failure could affect the company's ability to operate its facilities.
Disruptions to onsite operations
The company has a long operating history in industrial gas supply but only began onsite operations in 2019. As of FY24, three facilities are located at the sites of customers, including a major steel manufacturing company in India, Jairaj Ispat Limited, and a government-owned steel manufacturing company. The products manufactured at these facilities are supplied exclusively to these customers at prices outlined in the contracts.
Any unexpected challenge including decoration in relationship with clients leading to non-renewal of agreements may require the company to cease operations, inability at company level to supply required amount of gases may lead to loss of revenue and financial loss. Additional exposes like monthly charge for leasing equipment on the customer's premises.
| Customer concentration within sale of gases | FY24 | FY23 | FY22 |
| Percentage of Revenue from operations | |||
| Customer 1 | 1.94% | 2.50% | 2.10% |
| Customer 2 | 0.28% | Nil | Nil |
| Customer 3 | 1.45% | Nil | Nil |
Contracts through bidding process
The company supplies its products to government entities and PSU’s through competitive bidding processes and pre-qualification criteria. However, if the company fails to offer competitive quotations, it may not be selected for future contracts. Tender processes may be challenged even after contracts have been awarded due to extensive internal processes, policy changes, and insufficient funds, leading to increased time gaps between invitation for bids and award of contracts.
| Particular | FY24 | FY23 | FY22 |
| Number of contracts obtained through
government/PSU tenders |
65 | 71 | 85 |
| Revenue from contracts obtained through
government/PSU tenders (₹ million) |
364.96 | 519.3 | 555.9 |
| Revenue from contracts obtained through government
/PSU tenders, as a % of revenue from operations |
20.97% | 25.32% | 22.73% |
Supplies to industry
The company supplies gases for industrial use in various industries, including pharmaceuticals, steel, healthcare, aerospace, space, defense, etc. The demand for these products is directly affected by factors affecting these industries. The factors that could lead to volatility in demand by industrial units could be increased competition, seasonality of demand, market share loss, macro-economic conditions, overall slowdown in economy, etc.
| Industry | FY24 | FY23 | FY22 |
| % of Rev from Sale of Gases, Related Products and Services | |||
| Pharmaceuticals and chemicals | 29.44% | 31.03% | 20.96% |
| Steel | 28.52% | 21.73% | 14.33% |
| Dealer and retail network | 11.44% | 17.33% | 30.93% |
| Healthcare | 8.06% | 8.21% | 11.83% |
| Railway, aviation, aerospace & space | 5.81% | 6.85% | 6.78% |
| Defence | 4.28% | 4.20% | 3.10% |
| Engineering and infrastructure | 4.13% | 4.12% | 5.19% |
| Petrochemicals including oil & gas | 3.20% | 2.71% | 1.23% |
| Others | 5.12% | 3.82% | 5.65% |
Standards and quality checks
Every gas has its natural property and if wrong gases are reacted with each other, they can give uneven results. Their products and manufacturing processes are subject to stringent quality standards and specifications. Failure to maintain these standards could result in additional costs, legal liabilities and adverse impact on business fundamentals. Along with maintaining standards, they are required to test their products and provide relevant certifications of quality.
Capacity utilization
As of FY24, Ellenbarrie Industrial Gases operate eight facilities with capacity utilization affecting its operating results. High-capacity utilization allows us to spread fixed costs, resulting in higher gross profit margin. Our product mix, demand and supply balance, and average selling prices also affect capacity utilization. Industry/market conditions, customer requirements, and procurement practices also affect capacity utilization. Inefficiencies can lead to under-utilization of manufacturing capacities. Changes in customer demand can reduce our ability to accurately estimate future requirements, making it difficult to schedule production and potentially affecting our business, results, cash flows, and financial condition.
| Particulars | FY22 | FY23 | FY24 |
| Capacity Utilisation (%) | |||
| Uluberia, West Bengal | |||
| ASU plant | 93.82% | 98.14% | 100.31% |
| Hydrogen electrolyzer | 9.73% | 32.18% | 38.34% |
| Parawada (Visakhapatnam), Andhra Pradesh | |||
| ASU plant | 88.89% | 91.83% | 92.19% |
| Hyderabad (Jadcherla), Telangana | |||
| ASU plant | 10.16% | 94.23% | 108.50% |
| Kharagpur, West Bengal | |||
| ASU VSPA plant | 101.43% | 95.45% | 98.81% |
| ASU onsite plant | 93.44% | 89.89% | 89.82% |
| Nagarnar, Chhattisgarh - Since November 1, 2023 | |||
| ASU Plant | N.A | N.A. | 47.75% |
Facility concentration
As of FY24, four of their eight facilities are in West Bengal, with a new plant being set up and capacity expanding at an existing facility. These strategic locations in East India expose them to regional adversities, potentially requiring significant capital expenditure and changing business strategies.
Product concentration to revenue
The business relies heavily on the sale of oxygen and nitrogen and these two products contribute significant position of its revenue in 2023-24. However, the sale of these gases may decline due to factors such as seasonal demand, market share loss, economic conditions, and other government policies. A significant decline in oxygen or nitrogen usage could negatively impact the business, results of operations, cash flows, and financial condition.
| Gas | FY24 | FY23 | FY22 |
| % of Revenue from Sale of gases, related products and services | |||
| Revenue from sale of oxygen | 48% | 48.36% | 58.29% |
| Revenue from sale of nitrogen | 37.32% | 37.71% | 28.70% |
| Total rev. from sale of oxygen and nitrogen | 85.32% | 86.07% | 86.99% |
Ellenbarrie Industrial Gases Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Ellenbarrie Industrial Gases Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
