V guard Industries

V-guard Industries is a popular name in the southern part of India who produces mainly electric stabilizers. The company plans to open several production units in Tamilnadu, Himachal Pradesh and Uttaranchal. Therefore, it aims to finance those projects by issuing an IPO.
In this paper we will discuss about the advantage as well as the risk of being a V-Guard shareholder. V-guard Industries wishes to enter into the capital market through public issue. The company has a lot of pending projects for 2008, therefore it wants to fund those projects by issuing an initial public offer (IPO).

V-Guard Industries is a South Indian company, situated in Coimbatore, Tamilnadu, which produces voltage stabilizers. Its brand name is also “V-Guard”. It produces electric pumps, solar water heaters, insulated electrical cables, UPSs etc. Products made by V-Guard are used by both the industrial and housing users.

Previously, V-Guard marketed wall clocks, water purifiers, water-level controllers and electric motor starters which have been stopped now. However, in the financial year 2007, 42% of the company’s revenue had been generated by selling only voltage stabilizers.
In 2007, the amount of sales and profit recorded by the company was Rs 222.27 crores and Rs 18.41 crores. The market of V-Guard products has grown up rapidly. Therefore, to fulfill the rising demand, the company is planning to open another production unit of capacity 2 lakhs coils per month in Uttaranchal. Moreover, two pilot units will be established in Tamilnadu and Himachal Pradesh. So, V-Guard aims to finance these projects by issuing an IPO.

brand V-Guard is very popular in the southern part of India. In that respect, it will be profitable to go for its IPO. But, the company still is not a popular national brand. Most of the revenues come from South India. So, certain amount of risk is also associated with the V-Guard IPO.

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Last Updated on : 30th July 2013

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