Global Pet Industries coming with an IPO to raise Rs 13.23 crore

Global Pet Industries 

• Global Pet Industries is coming out with an initial public offering (IPO) of 27,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 49 per equity share.
• The issue will open for subscription on June 28, 2023 and will close on July 3, 2023.
• The shares will be listed on NSE Emerge.
• The share is priced 4.90 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Rashmi Kumari.

Profile of the company

The company is engaged in the business of manufacturing of pet machines, pet blow machine, fully automatic pet machines, semi-automatic pet machines, pet blow moulding machine, pet bottle moulds, industrial semi-automatic pet machine and spares, components, parts and accessories of such machines and equipment and other mechanical products including their components, parts and accessories.

The company is engaged in manufacturing of PET Stretch Blow Moulding Machine which is used for manufacturing of machine which is suitable in business segment of Pet stretch below moulding solutions from 50ml to 20 Litres of PET bottles such as fridge bottles, packaged drinking mineral water bottles, carbonated soft drinks bottles, hot fill juice bottles, edible oil bottles, liquid detergent bottles, cosmetic products bottles, confectionery jars, Pharma bottles, liquor & distilleries bottles, pesticides bottles, etc. Apart from manufacturing of PET Stretch Blow Moulding Machine, the company also provides after sales services such as providing spares, components, accessories and providing repairs and maintenance of the machines after delivery. The company has acquired the running business of M/s Global Pet Industries, a Sole Proprietorship firm of its promoter, Mr Bipin Nanubhai Panchal vide Assignment of Business Agreement dated August 09, 2013 entered by and between its promoter and the company.

Proceed is being used for:

• Funding capital expenditure towards construction of factory building.
• General corporate purposes.

Industry overview

A globally competitive manufacturing sector is India's greatest potential to drive economic growth and job creation this decade. Due to factors like power growth, long-term employment prospects, and skill routes for millions of people, India has a significant potential to engage in international markets. Several factors contribute to their potential. First off, these value chains are well positioned to benefit from India's advantages in terms of raw materials, industrial expertise and entrepreneurship. Second, they can take advantage of four market opportunities: expanding exports, localising imports, internal demand, and contract manufacturing. With digital transformation being a crucial component in achieving an advantage in this fiercely competitive industry, technology has sparked creativity. Manufacturing sector in India is gradually shifting to a more automated and process driven manufacturing which is expected to increase the efficiency and boost production of the manufacturing industry. 

The India PET packaging market size reached $1.4 Billion in 2022. Looking forward, IMARC Group expects the market to reach $1.8 Billion by 2028, exhibiting a growth rate (CAGR) of 4.87% during 2023-2028. Polyethylene terephthalate, or PET, is a polyester thermoplastic elastomer widely used for packaging applications. It becomes flexible on heating and can be easily molded into a wide variety of shapes. It is substantially more cost-effective than other packaging materials, such as glass, aluminum and copper. PET packaging is lightweight, which reduces transportation costs and offers an economical packaging solution to end users. It also provides high dimensional stability and resistance to moisture, solvents, and alcohols. 

The emerging trend of on-the-go food consumption in India has increased the demand for single-serve and small-sized products packed in materials like PET and metal cans. Flexible packaging materials like PET remain popular across the country as consumers are price-conscious and seek products that offer value for money. Besides the food and beverage industry, PET packaging is also used for packaging beauty, personal care, and pet food products. The growing sales of these products are catalyzing the growth of the market. Furthermore, the increasing demand for customized and different sized packs for brand differentiation is also positively impacting the market growth.

Pros and strengths

Product portfolio: Its product mix has evolved over the past several years as it has entered into new product categories. Its product portfolio includes Electra series- All Electric Servo Controlled Fully Automatic Pet Stretch Blow Moulding Machine, Eco Series - 3 Cavity Automatic Pet Stretch Blow Moulding Machine, Fully Automatic Pet Stretch Blow Moulding Machine and semi-Automatic Pet Stretch Blow Moulding Machine and types thereof. It engages in manufacturing of products based on the orders of its customers to meet their requirements. It trusts that maintaining a variety of products in its business provides it with an opportunity to cater to diverse needs of different customer segment. Its products undergo quality check at various levels of production to ensure that any quality defects or product errors are rectified on real time basis.

Quality assurance: It is committed to maintain quality at all steps from procurement of raw materials till dispatch. It has established a quality control team which has the responsibility to ensure compliance with manufacturing practices. Before commencement of the manufacturing process, the materials purchased by the company has to undergo a quality check, to ensure that they are of relevant quality and match the standards as specified. The finished products are tested by its in-house quality team to ensure that the same is of relevant standards and design as specified by the customer; the products are then packed and dispatched. 

After Sales Service: Apart of manufacturing of PET Stretch Blow Moulding Machine, the company also provides after sales services such as providing spares, components, accessories and providing repairs and maintenance of the machines after delivery. The company offers, services such as free pre installation service enabling complete installation of machines at the customers’ manufacturing facility and also provide user training to guide its customers for better understanding of the products.

Risks and concerns

Dependent on third party logistics services: The Company uses third party transportation providers for delivery of its manufactured machines and supply of its raw materials. Though its business has not experienced any disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on its business. These transportation facilities may not be adequate to support its existing and future operations. In addition, raw materials/ finished products may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of its manufactured machines may have an adverse effect on its business and results of operations. 

Highly competitive market: It operates in a competitive market. Many Indian and foreign players are operating in the machine tools market. There are several strategies adopted by its competitors to increase their market share through pricing, service, new product introductions and distribution reach among others. This increased competition by both traditional and new players may affect its margins. In order to protect its existing market share or capture market share, it may be required to increase expenditure for increasing its reach and to introduce and establish new products. Due to inherent risks in the marketplace associated with new product introductions, including uncertainties about user industry’s response, increased expenditure may not prove successful in maintaining or enhancing its market share and could result in lower profitability.

Depends on key Personnel: Its success largely depends upon the knowledge and experience of its Promoter, Directors, Key Managerial Personnel and Senior Management as well as its ability to attract and retain skilled personnel. Any loss of its Promoter, Directors, Key Managerial Personnel and Senior Management or its ability to attract and retain them and other skilled personnel could adversely affect its business, financial condition and results of operations. It depends on the management skills and guidance of its Promoter for development of business strategies, monitoring their successful implementation and meeting future challenges. 

Outlook

The company is engaged in manufacturing of PET Stretch Blow Moulding Machine which is used for manufacturing of machine which is suitable in business segment of Pet stretch below moulding solutions from 50ml to 20 Litres of PET bottles. On the concern side, it operates in a competitive market. Many Indian and foreign players are operating in the machine tools market. There are several strategies adopted by its competitors to increase their market share through pricing, service, new product introductions and distribution reach among others. This increased competition by both traditional and new players may affect its margins.

The company is coming out with an IPO of 27,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 49 per equity share to mobilize Rs 13.23 crore. On performance the company’s revenue from operations was increased by 22.59% to Rs 2,760.57 lakh for the FY 2022 from Rs 2,251.79 lakh for the FY 2021 due to increase in its export revenue from operations from Rs 461.63 lakh to Rs 1000.09 lakh. However, profit after tax decreased by 18.62% to Rs 115.96 lakh in FY 2022 from Rs 142.49 lakh in FY 2021. Going forward, the company aims to expand and diversify its product portfolio by increasing its product base and introducing new range of product lines. It plans to continue expanding its manufacturing capabilities in order to capture future growth trends. It intends to explore opportunities to expand its operations by developing new products and services within its existing lines of business. Further expanding its service offerings will help it to build on existing diversification of its business.