Timbor Home IPO oversubscribed 5.78X

3rd June 2011, By

The Timbor Home Ltd, manufacturer and retailer of modular kitchen has plans to go for an IPO at a price band between Rs 54-63 to fund its expansion plan in India. The company is planning to raise around Rs 19 crore to Rs 23 crore through this IPO. These funds will be used for the purchase of machinery for capacity expansion, working capital and establishment of new stores across the country.

An Initial Public Offering (IPO) is when a company (called the issuer, Timbor Home in this case) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

The issue has subscribed 5.78 times, as per data available on NSE. It has received bids for more than 2 crore equity shares as against issue size of 36.9 lakh equity shares. Retail investors were the leading participants in the issue. Their portion was subscribed 14.22 times, with receiving bids for more than 1.8 crore shares as against reserved portion of 12.9 lakh shares.

The company plans to increase their number of stores to 300 and the count of dealers to over 200 in the next few years, reports said. Timbor Home currently has 84 outlets across India, of which 80 are operated by franchisees. This kind of drastic expansion is more likely to be achievable through franchising.

Timbor Home Ltd. is an international manufacturer and retailer of Solid Wood Furniture, Modular Kitchens and Doors. State-of-the-art Italian technology manufacturing plant boosts their production line enabling to rise above the competition and a distribution network comprising of franchisee stores across India.

Timbor Home has three manufacturing units in Gujarat. One is located at Changodar in Ahmedabad which is famous for the kitchen and furniture manufacturing. The second unit is located at Vatva GIDC in Ahmedabad where the Stainless Steel Kitchen baskets and accessories are manufactured. And the third is at Umreth in Anand for manufacturing of doors, wood treatments and storage. The Timbor Home has total manufacturing facility of about 2, 00,000 sq. ft.

The Timbor Home Franchise Opportunity: The company offers franchisees with options like Timbor Home that markets the home furniture concept, Timbor Cucine is its modular kitchen concept and Timbor Door that retails doors and related components franchisee. They also plan on launching Timbor Hospitality.

The company has expanded its network aggressively by pursuing the franchisee model - 97% of its stores are franchise stores and just 3% company owned company operated. During FY10, the company generated 49% of revenues from franchise stores.

Several franchise companies have raised money through the primary markets. Some of the listed franchise companies are NIIT, Aptech, Motilal Oswal, Jubilant Organosys (Dominos India Master Franchisee), VLCC, Talwalkars, Zee Interactive and many others. Some of the other upcoming IPOs in the franchise industry include Jawed Habib that filed their draft prospectus in February 2011.