Eco Fuel Systems (India) IPO

About Eco Fuel Systems (India) Ltd IPO

The IPO of Eco Fuel Systems (India) Ltd comprises a fresh issue of up to 60,03,200 equity shares of face value of ₹10 each. It’s a 100% book-built issue. The IPO opens on TBA and closes on TBA. The shares will be credited to the demat account on TBA. The refunds will be initiated on TBA and allotment of shares will take place on TBA.

Objectives of Eco Fuel Systems (India) Ltd IPO

• Funding capital expenditure requirements by investment in purchase of vehicles, modification, development and approval cost
• Funding the working capital requirements of the company
• Loan to subsidiary company, Ecofuel Cylinders Private Limited to meet its working capital requirement
• General corporate purposes
• To meet issue related expenses

Industry Outlook

The Indian automobile CNG and LPG kit market was estimated to be worth USD 5.15 million in 2019 and is expected to develop at a volumetric growth rate of 7.77% between 2016 and 2026, according to ASD Reports.

The need for CNG and LPG conversion kits is rising as the automobile sector moves toward sustainability. With the help of these kits, traditional gasoline and diesel cars can be converted to run on CNG or LPG, which significantly lowers emissions and running expenses.

Company Information

Eco Fuel Systems (India) Pvt Ltd is engaged in the business of trading, distribution, retro fitment, kit integration, and testing of alternative fuel systems, including LPG, CNG, and LNG conversion kits, catering to three wheelers, four-wheelers and heavy-duty vehicles.

Its operations encompass not only the supply of conversion kits to its extensive network of dealers and distributors but also retro-fitment services for vehicles, ensuring seamless integration and optimised efficiency for its clients.

Risks of Eco Fuel Systems (India) Ltd IPO

• Geographical Concentration

The company’s business operations are primarily concentrated in India, and its revenue is largely dependent on the domestic market. This geographic limitation exposes it to risks associated with regional economic conditions, government policies, regulatory changes and market demand fluctuations.

Any adverse changes in fuel pricing policies, environmental regulations, taxation structures, or restrictions on the use of alternative fuel kits in India could negatively impact its business growth and profitability.

• Inability to Obtain or Renew Necessary Approvals from Government Agencies

The company requires several statutory and regulatory permits, licenses and approvals to operate its business. Many of these approvals are subject to periodical renewal.

Any failure to renew the approvals that may expire, or to apply for the required approvals, licenses, registrations or permits, or any suspension or revocation of any of the approvals, licenses, registrations and permits that have been or may be issued to it, could result in delaying the operations of its business, which may adversely affect its business, financial condition, results of operations and prospects.

• Changes in Government Policies

The company’s operations are subject to government policies in both India and Italy, which directly influence its ability to conduct business effectively. As Landi Renzo SpA is an Italy-based company, any regulatory shifts, trade restrictions, or policy changes in Italy that impact the export of alternative fuel kits could disrupt its supply chain.

Such disruptions may lead to procurement challenges, increased costs, shipment delays, or even supply shortages, ultimately affecting its ability to meet market demand. Changes in trade agreements, tariffs, or export regulations in Italy could further escalate costs and hinder smooth business operations. Similarly, in India, its business is closely tied to government policies regarding alternative fuels, emissions standards, taxation, import duties, and vehicle retrofitting regulations.

Peer Comparison

No listed peers are available as on the date of draft red herring prospectus.

Anchor Investor Bidding Date TBA

IPO Registrar and Book Running Lead Manager

• IPO Registrar: Skyline Financial Services Private Ltd
• Book Running Lead Manager: Arihant Capital Markets Ltd

Business Model

Eco Fuel Systems (India) Ltd earns its revenue through sale of CNG and LPG conversion kits, installation of fuel kits, and maintenance contracts. Additional revenue streams include sale of cylinders, spare parts and providing technical support. The demand for these services is driven by rising fuel costs, stricter emission norms, and government incentives promoting green energy solutions.

Company Growth Trajectory

The company’s EBITDA margin jumped from 7.09% in FY 22 to 16.34% in FY 24. Its PAT margin recorded a growth from 4.41% in FY 22 to 10.08% in FY 24. Diversified product portfolio coupled with quality assurance and standards and an experienced management team has played a key role in the company’s progress over the years.

Market Position

Eco Fuel Systems (India) Ltd sources its components from Landi Renzo SpA, a globally recognised company based in Italy, which sells its Alternate fuel kits under the brand name LOVATO. It has a long-term agreement that allows it to market and sell LPG, CNG, and LNG conversion kits in India under the LOVATO brand name. Initially operating as an authorised distributor for Lovato’s CNG and LPG kits, the company became the sole and exclusive distributor across India in 2012.

How to Check Allotment Status of Eco Fuel Systems (India) Ltd IPO?

1. Visit the Registrar’s Website

• Visit the official website of Skyline Financial Services Pvt Ltd
• Under ‘Investors’, go to ‘Rights Issue’ and click on ‘Check Allotment Status’
• Select Company’s Name, input client ID / folio number / DP ID and enter PAN or CAF number and click on ‘Search’ to know the status

2. Verify on National Stock Exchange Website

The National Stock Exchange (NSE) has an IPO Bid Verification module. You can use it to check the status of Eco Fuel Systems (India) Ltd. Go to www.nseindia.com and find the 'Invest' tab. Click on 'Verify IPO Bids' under 'Resources & Tools'. On the NSE IPO Bid Verification page, enter:

• Company name from dropdown
• Application number
• PAN

Then click 'Submit' to know the allotment status.

How to Apply for Eco Fuel Systems (India) Ltd IPO?

• Log in to your Kotak Securities Demat account - Log in to your Demat account to access IPO investments. Next, select the current IPO section.
  
• Specify IPO details - Enter the number of lots and the price you wish to apply for.
  
• Enter UPI ID - After entering your UPI ID, click submit. This will place your bid with the exchange.
  
• Mandate Notification - Your UPI app will receive a mandate notification to block funds.
  
• Approve Request - Your funds will be blocked once you approve the mandate request on your UPI.