Technopack Polymers coming with an IPO to raise Rs 7.87 crore

Technopack Polymers

• Technopack Polymers is coming out with an initial public offering (IPO) of 14,30,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 55 per equity share.
• The issue will open on November 2, 2022 and will close on November 7, 2022
• The shares will be listed on SME Platform of BSE.
• The share is priced 5.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is ISK Advisors.
• Compliance Officer for the issue is Deepali Malpani.

Profile of the company

The company was incorporated as Technopack Polymers Private Limited on August 09, 2018 under Companies Act, 1956. Further the name of the company was subsequently changed to “Technopack Polymers Limited” pursuant to a special resolution passed by the shareholders of the company at the Extra Ordinary General Meeting held on July 11, 2022. A fresh certificate of incorporation consequent upon change of name was issued on July 15, 2022 by the Registrar of Companies, Ahmedabad.

The company manufactures high quality PET preform on 48 cavity state-of-art, world class Milacron Machine and ACME Mould with “TECHNOPET” brand name. The company also manufactures high quality CCM CAP. The major product ranges offered by the company include PET Preforms and HDPE Cap Closure. PET Preforms are used by customer companies for packaged drinking water industry, Carbonated Soft Drinks etc. Preform manufactured by the company is made from premium PET resin. The Pet Preforms are acclaimed for their excellent quality. These Pet Preforms can be availed in any color and size, as per the special requirements of the clients. Moreover, Cap-Closure is made by HDPE plastic granules. It is manufacturing CAP-Closure by world class continuous compression moulding system.

Proceed is being used for:

• Part funding to purchase and set up additional SACMI CCM24S-F plant for manufacturing of HDPE Beverages Closures (Compression moulding machine fully equipped with all ancillaries).
• Additional working capital requirement.
• General Corporate Purpose.

Industry Overview

In India PET has become the primarily preference in the packaging sector owing to the rigidity it offers, its eco-friendly attribute and recyclable nature. The demand for PET in the packaging of food and beverages witnessed a steep inclination after the sudden outbreak of Coronavirus in the final quarter of FY 20. This astonishing increase in demand is a ripple effect of the increasing awareness of hygiene, prompting an enhanced procurement of disposable and packaged items to reduce the chances of infection by any means.

Moreover, the increasing preference for PET bottles over aluminum and glass packaging, in rapidly expanding Indian pharmaceutical sector owing to its quality standard and safety is anticipated to further propel the demand for PET in the forecast period. As the healthcare and pharmaceutical sectors are likely to witness a robust expansion due to increasing requirement for equipment and medications after the Pandemic, the need for PET bottles for medical packaging is perceived to witness an incredible surge in the coming years.

Polyethylene Terephthalate is being manufactured in India on massive capacity by Reliance Industries followed by three other companies. Hence, majority of the PET demand in India is satisfied by domestic production but cheap imports from other countries have certainly caused abrupt material injury to the Indian production in the last few years. However, the immense production capacity of PET in the country is also sufficient to cater to the export requirements from countries like Algeria, Bangladesh, Egypt, etc. Sudden spike in demand for PET from food and beverages and healthcare industries has made the manufacturers to operate over 60 per cent efficiency in order to profoundly fulfill the domestic as well as international demand.

Pros and strengths

Modern facility & manufacturing process: The company is manufacturer & supplier of PET Preforms and CCM Caps with state-of-the-art facility at Morbi in Gujarat. The Company has fully automatic machines for manufacture of PET Preform & Cap Closure at M/s Gokul Industries, Rafaleshvar Ind. Estate, Nr. Rafaleshvar Rlw. Track, Morbi, Jambudiya, Rajkot in Gujara.

Experienced Promoters and a well-trained employee base: The Promoter Directors Kalpeshkumar Ishwarlal Pandya and Chetankumar Ishvarlal Pandya are actively involved in manufacturing activities of the Company. They actively participate in timely execution of the customer’s orders and are the guiding force behind the growth and business strategy of the company. The promoters together have industry experience of many years and possess rich business intellect in the business circle of Gujarat. Moreover, the company’s management and employee team combines expertise and experience to outline plans for the future development of the company.

Risks and concerns

Seasonal business: The company’s major sales of its products are made to packaged mineral water supplier companies and soft drinks providers. The sales of these items are at peak in summer seasons and lower in winter seasons as per industry practices. As the company products are supplied to these vendors, its major sales are done in summer seasons and lesser sales in winter seasons. In case of any variation in its sales number for any quarter or half year may not reflect true affairs of the company and any reliance placed on it might affect investors and other stake holders in general.

Concerns over plastic ban and environment for packaged water bottles: The company uses PET (Polyethylene Terephthalate) for producing ‘PET Preforms’ and HDPE (High Density Polyethylene) for producing ‘Bottle Caps’ as Raw Materials. Both of these materials are one of the safest plastics and can be recycled very easily. Therefore, not likely to be banned, however if in future any restriction on the use of recyclable PET and HDPE products for packing may adversely affect the company’s business.

Outlook

Technopack manufactures high-quality PET preform on 48 cavity state-of-art, world-class Milacron Machine and ACME Mould with the ‘TECHNOPET’ brand name. The company also manufactures high-quality CCM CAP. The company’s product portfolio includes PET Polyethylene Terephthalate (PET Preforms are used by customer companies for the packaged drinking water industry, Carbonated Soft Drinks etc.), and Cap-Closure is made by HDPE plastic granules. On the concern side, the company’s business derives a major portion of its revenue from its users. The loss of a major customer or a significant reduction and sales of, or demand for its products from its major customers, may adversely affect its business, financial condition.

The company is coming out with an IPO of 1,43,0000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 55 per equity share. On performance front, In Fiscal 2022, revenue from operations has increased by Rs 420.62 lakh or 5.73%, from Rs 577.56 lakh in Fiscal 2021 to Rs 998.18 lakh in Fiscal 2022. The increase in the Fiscal 2022 was due to increase in the sale of products after recovering from economic slowdown due to Covid-19. The company’s Profit after Tax has increased by Rs 208.92 lakhs or 20.71%, from Rs 1.91 lakhs in Fiscal 2021 to Rs 210.83 lakhs in Fiscal 2022. Going forward, the company has a skilled team for marketing which personally indulges in formation of marketing strategies apt for the right promotion of the products manufactured by the company. To retain its customers, its team, regularly interacts with them and focuses on gaining an insight into the additional needs of customers. Since the target industries and customers are known to the company, the sales teams approach them and solicit business for various verticals. The quality of service the company offers is one of its most effective marketing tools.