Ad-for-equity media investor DB Corp’s (that runs the Dainik Bhaskar group) two-and-a-half-year old bet in furniture-maker Timbor has gone underwater while Bennett, Coleman & Co. Ltd’s (The Times of India group) one-and-a-half-year old investment is sitting on neat returns in the on-going IPO of the Ahmedabad-based company.
This can be due to the timing of the investments. DB Corp had picked the stake in October, 2008, weeks after the collapse of Lehman Bros, and invested around Rs 4 crore with an average cost price of around Rs 144 a share. Although the investments came in when market valuations were headed towards hitting a low, the agreement would have been sealed ahead and thereby, at high valuations, which could not be sustained post-economic slowdown.
On the other hand, Bennett, Coleman & Co. picked a much larger chunk of shares at far lower price in February, 2010. The firm invested around Rs 2.34 crore directly and another Rs 65 lakh through another entity, taking its total commitment to around Rs 2.99 crore and picked as much as 29.59 per cent stake. Bulk of these shares was acquired at par value, bringing down its average cost of purchase to just around Rs 9.1 per share.
At the issue price band of Rs 54-Rs 63 a share, the Dainik Bhaskar group has lost over half of its investment value while Bennett, Coleman & Co. is sitting on unrealised gains of 6x-7x, according to VCCircle estimates.
The issue itself got a reasonable welcome, surprisingly from retail investors, who lapped up more than what was reserved for them on Day I itself – thus subscribing to around half of the total issue. This is even as both institutional investors and HNIs were not much moved by the issue. Given that one recent issue had to be pulled out as it failed to gather momentum from large investor groups, Timbor’s performance is commendable and may very well sail through.
The company is looking to raise as much as Rs 23 crore in the maiden public float which may value the firm at around Rs 93 crore ($20.5 million). Timbor is looking to use the proceeds from the issue for machinery purchase, establishing new stores across India and meeting additional working capital requirements.
For the year ended March, 2010, the firm had a total income of Rs 51 crore with net profit of Rs 1.77 crore. The company which was incorporated as Inside Outside India Dot Com Pvt Ltd during the days of dotcom boom, was renamed around four years ago.
It has three manufacturing units – one located at Changodar in Ahmedabad district, the second unit at Vatva GIDC, Ahmedabad, and the third one at Umreth, in Anand district. It manufactures a wide range of kitchens & kitchen components, furniture, doors & door frames, kitchen baskets and accessories. The company operates as a manufacturer-retailer, with 80-plus exclusive retail outlets operating on a franchise model.
The company markets its products under the brand names Timbor Cucine (modular kitchens), Timbor Doors (doors & door frames), Timbor Home (home furniture) and IKI Kitchens (hi-end kitchen solutions using ‘Hettich’ hardware and accessories).