GSM Foils
- GSM Foils is coming out with an initial public offering (IPO) of 34,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 32 per equity share.
- The issue will open for subscription on May 24, 2024 and will close on May 28, 2024.
- The shares will be listed on NSE Emerge Platform.
- The share is priced at 3.20 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 Pratik M Makwana.
Profile of the company
GSM Foils is engaged in the business of manufacturing Blister Foils and Aluminium Pharma Foils (also known as ‘Strip Foils’) which is used in packing of pharmaceutical medicines which includes capsules and tablets both. This is a primary packaging material which comes in direct contact with the medicine, hence, utmost care is taken with regards to its quality. Over the past few years, it has acquired definite know how in different types of foils used in pharmaceuticals companies. It offers Aluminium foils in different sizes, shapes and thickness to meet diverse needs of its clients. The range of its products includes plain and printed aluminium foils and strip foils along with alu alu base foils and it ranges from 0.020/ 0.025/ 0.030/ 0.040 micron for coated /ploy laminated/ blister/ strip printed foils.
Aluminium Foil or Strip Foils are one of the packaging options for highly sensitive pharmaceutical products that protect the medicines from oxygen, moisture, and other environmental influences. These foils are used in packaging of capsules which requires more bursting strength as they are bigger in size and is used to create a push-through closure with lid film where tablets and capsules are protected perfectly and hygienically. Blister Foils are commonly used as unit-dose packaging for pharmaceutical tablets. Blister foils are suitable for hard packing of medical and pharmaceutical products. It is heat seal coated on the bright side and print-treat coated on the matte side the primary component of blister packs are made from ‘Formable’ web, either plastic or aluminium, the formed cavity or pocket contains the product and the ‘lidding’ seals the product in the package.
It is offering products which are quality tested as per industrial standards. As an ISO 9001:2015 certified company its aim is to provide products at a competitive price, therefore, it has invested in suitable manufacturing techniques and has presented a wide assortment of highly demanded products. Owing to the allied support of industry recognized vendors it is able to source the inventory of raw material and produce quality products that augment its brand image. With in-house capacity of Coating, laminating and printing process, it provides its client quick and cost-effective services, which help them reduce their down time and execute their packaging line in a systematic manner.
Proceed is being used for:
- Funding of capital expenditure towards purchase of plant and machineries
- Funding working capital requirements of the company
- General corporate purposes
Industry overview
Manufacturing is emerging as an integral pillar in the country’s economic growth, thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables. The Indian manufacturing industry generated 16-17% of India’s GDP pre-pandemic and is projected to be one of the fastest growing sectors. The machine tool industry was literally the nuts and bolts of the manufacturing industry in India. Today, technology has stimulated innovation with digital transformation a key aspect in gaining an edge in this highly competitive market. Technology has today encouraged creativity, with digital transformation being a critical element in gaining an advantage in this increasingly competitive industry. The Indian manufacturing sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity.
Manufacturing exports have registered highest ever annual exports of $447.46 billion with 6.03% growth during FY23 surpassing the previous year (FY22) record exports of $422 billion. By 2030, Indian middle class is expected to have the second-largest share in global consumption at 17%. India’s gross domestic product (GDP) at current prices stood at Rs 51.23 lakh crore ($694.93 billion) in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22. The manufacturing GVA at current prices was estimated at $77.47 billion in the third quarter of FY22 and has contributed around 16.3% to the nominal GVA of during the past ten years
India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country. The manufacturing sector of India has the potential to reach $1 trillion by 2025. The implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of $2.5 trillion along with a population of 1.32 billion people, which will be a big draw for investors. The Indian Cellular and Electronics Association (ICEA) predict that India has the potential to scale up its cumulative laptop and tablet manufacturing capacity to $100 billion by 2025 through policy interventions.
Pros and strengths
Cost effective production and timely fulfilment of orders: The Unique Selling Point of the company is effective and fast service for which it always maintain a good amount of inventory with the company. Its core team looks after the healthy day to day production and proper committed dispatch to its clients on daily basis. The company has implemented a number of measures to guarantee prompt fulfilment and to increase cost effectiveness. In order to ensure cost-effective production, the company continuously works to adopt an efficient procurement policy for inputs required for production. This is done to ensure that procurement is done in a cost-effective manner.
Product portfolio: Its production capacity has gradually increased over the past several years. Its diversified range of product portfolio allows the company to meets the customer’s requirements as per their need. It has added range of blister foils and Aluminum Strip Pharma Foil in its portfolio such as Printed Vinyl Monomer Coating and Heat Sealable Coated (VMCH) Aluminum Blister Foil, Blister Foil reels, Printed aluminum pharma foil, Aluminum Strip pharma foils slitted reels etc.
Well-equipped manufacturing facility: its manufacturing facility, which spans 7,973 square feet which includes three stores and a ground level, is situated in Vasai, Mumbai, Maharashtra, India. It is designed and equipped to ensure that the production process runs smoothly. This facility includes everything needed for hassle-free research, production, quality testing, storage, and packaging. Because of its manufacturing unit's increased production rate, it consistently meets its customers' bulk orders. To maintain the output rate, all of its machines receive regular upgrades and lubrication from researchers who employ top-notch staff. Additionally, it maintains all the finished products in a secure and organized manner at a warehousing unit located within its manufacturing facility. A team of interactive personnel retains get in touch with the clients to know their exact requirements and serves them accordingly.
Risks and concerns
Do not have long-term agreements with suppliers: Its business is significantly affected by the availability and cost of the raw materials with which it needs to develop its products. Its principal raw materials include Aluminium Sheets. It usually does not enter into long-term supply contracts with any of its raw material suppliers. Its raw materials are majorly procured in the domestic market from Dadra & Nagar Haveli, Gujarat, Maharashtra, Rajasthan and Uttar Pradesh and the prices and supply of these raw materials depend on factors beyond its control, including general economic conditions, competition, transportation costs and Capital Market Fluctuations both domestic and international. If, for any reason, its suppliers of raw materials and components should curtail or discontinue their delivery of such materials to it in the quantities it needs or at prices that are competitive or expected by it, its ability to meet the requirements of its customers could be impaired and its earnings and business could suffer.
Depend on top 10 customers: Given the nature of its business, there can be no assurance that it would be able to attract new customers or reduce its dependence on any of its top customers. It expects that its will continue to be reliant on its major customers for the foreseeable future. Accordingly, any failure to retain these customers or to remain suppliers to these customers and/or negotiate and execute contracts on terms that are commercially viable, with these select customers, could adversely affect its business, financial condition and results of operations. In addition, any defaults or delays in payments by a major customer or the insolvency or financial distress by a major customer may have an adverse effect on business, financial condition and results of operations.
Working capital requirements: Its business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.
Outlook
GSM Foils is engaged in the business of manufacturing Blister Foils and Aluminium Pharma Foils (Strip Foils) which is used in packaging of pharmaceutical medicines which includes capsules and tablets both. This is a primary packaging material which comes in direct contact with the medicine, hence, utmost care is taken with regards to its quality. Over the past few years, it has acquired definite know how in different types of foils used in pharmaceuticals companies. It offers Aluminium foils in different sizes, shapes and thickness to meet diverse needs of its clients. The range of its products includes plain and printed aluminium foils and strip foils along with alu alu base foils and it ranges from 0.020/ 0.025/ 0.030/ 0.040 micron for coated /ploy laminated/ blister/ strip printed foils. On the concern side, the market for Blister Foil & Aluminium Strip manufacturers is highly competitive, and it expects competition to intensify and increase from a number of sources. It competes in pharmaceutical industry on the basis of the range of its products, quality of its products, price, securing government tenders and distribution network.
The company is coming out with an IPO of 34,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 32 per equity share to mobilize Rs 11.01 crore. On performance front, revenue from operations had decreased by 8.30% from Rs 7185.04 lakh in Fiscal 2022 to Rs 6588.35 lakh in Fiscal 2023. This decrease was primarily due to the fall in the aluminium prices during the FY 2023 as compared to the fiscal year 2022. The company reported a net profit of Rs 142.97 lakh in Fiscal 2023 as compared to a net profit of Rs 63.65 lakh in Fiscal 2022. 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 Aluminium foil business.
