TBI Corn coming with IPO to raise Rs 44.94 crore

TBI Corn

• TBI Corn is coming out with initial public offering (IPO) of 47,80,800 shares of Rs 10 each in a price band Rs 90-94 per equity share.  
• The issue will open for subscription on May 31, 2024 and will close on June 04, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 9.00 times of its face value on the lower side and 9.40 times on the higher side. 
• Book running lead manager to the issue is Swastika Investmart and co- lead manager to the issue is Ekadrisht Capital.
• Compliance Officer for the issue is Ishani Dhupar.

Profile of the company

TBI Corn, an ISO 9001:2015 and ISO 22000:2018 certified company, is a prominent player in the corn milling industry. Located in the Sangli district of Maharashtra, India, it specializes in the production of good-quality Corn / Maize Grits and related products. Its journey began in 2000 as a partnership firm with three founding partners, Yogesh Laxman Rajhans with 2 other partners. It named its venture ‘The Best India’ with the vision of shining as a symbol of beautiful India. 

The Company offers a diverse range of products, including cleaned and fat-free Corn Grits/Meal, Corn Flakes, Stone-free Broken Maize & Corn Flour and Turmeric Finger, all manufactured without chemical additives or preservatives and GMO-free. Apart from ISO certifications, it holds certificates from MSME, APEDA, and are both Indian Organic and USDA Organic certified. It has successfully expanded into international markets, serving countries in the Gulf, Sri Lanka, Malaysia, Brunei, Vietnam, South Korea and soon, Europe and the US.

Its products have a global presence, including UAE, Bahrain, Qatar, Kuwait, Saudi Arabia, Oman, Yemen, Jordan, Israel, Liberia, Sri Lanka, Malaysia, Brunei, Vietnam, South Korea, and plans to venture into Europe and the US. It proudly supplies to renowned companies across India. Its products cater to the needs of corn starch and cattle feed industries, with potential expansion in this sector. It has dedicated teams for research and development, ensuring continuous innovation and strategic growth. The Company is a trusted name in the corn milling industry, known for its commitment to quality, innovation, and international excellence. With its expanding reach and unwavering dedication, it aims to continue providing good quality corn products to customers worldwide.

Proceed is being used for:

• Expansion of existing unit
• Meeting incremental working capital requirement
• General corporate purpose

Industry overview

The maize industry in India plays a significant role in the country's agricultural sector. Maize, also known as corn, is one of the major cereal crops grown in India and is cultivated across various states. The corn grit industry plays a significant role in the global food market, providing a versatile and essential ingredient used in various food products. Corn grits, also known as cornmeal or polenta, are coarsely ground corn kernels used as a primary ingredient in traditional dishes, snacks, and processed food products. 

Among the maize growing countries, India ranks 4th in area and 7th in production, representing around 4% of the world's maize area and 2% of total production. During 2018-19 in India, the maize area has reached 9.2 million ha. During 1950-51 India used to produce 1.73 million MT maize, which has increased to 27.8 million MT by 2018-19, recording close to 16 times increase in production. The average productivity during the period has increased by 5.42 times from 547 kg/ha to 2965 kg/ha, while the area increased nearly three times. Though the productivity in India is almost half of the world, the average per day productivity of Indian maize is at par with many lead maize producing countries.

The Indian government has taken various initiatives to support the maize industry. It promotes the adoption of improved farming practices, provides subsidies on seeds and fertilizers, and encourages research and development in maize cultivation. The government also focuses on increasing investment in infrastructure, storage facilities, and processing units to minimize post-harvest losses and add value to the maize industry. Overall, the maize industry in India is a vital component of the agricultural sector. With increasing demand for maize based products domestically and globally, efforts to enhance productivity, address challenges, and promote sustainable practices are essential for the growth and development of this industry.

Pros and strengths

Quality control: Its competitive strength at TBI lies in its unwavering commitment to delivering exceptional quality in corn grit, corn flex, and corn flour and other related products. With a state-of-the-art production facility, cutting-edge technology, and stringent quality control measures, it ensures that its offerings meet the highest standards. Its vertically integrated supply chain, from sourcing premium corn to the final product, allows it to maintain consistency, traceability, and cost-efficiency. 

Consistently increasing trend in export revenue: It secured Rs 3,765.26 lakh, Rs 2,026.13 lakh and Rs 916.71 lakh of the exports revenue as on March 31, 2023, 2022 and 2021 respectively. It exports its products to different countries like Dubai, Oman, Jorden, South Africa, Vietnam etc. and payment for these sales is received in foreign currency.

Over 25 years of industry expertise: The Company’s human resources represent a wealth of experience, having meticulously built their presence within the industry from the ground up over a span of 25 years. The core team stands out for their adept comprehension of corn price fluctuations, cultivated through years of dedicated observation and analysis. This acumen has been utilized to establish enduring relationships with customers, actively sharing insights that aid in prudent cost-saving measures. The plant's workforce forms an integral part of the company's operations. Their collective contributions play a pivotal role in upholding operational efficiency and delivering products and services of the highest calibre.

Risks and concerns

Dependent on key customers: Its operations are dependent on the requirements of its customers, it generates Rs 3,620.80 lakh, Rs 5,525.99 lakh, Rs 4,027.47 and Rs 3,514.20 lakh revenue, which is almost 35.83%, 39.67%, 40.16% and 52.48% of the Revenue from operation generated as on December 31, 2023, March 31, 2023, 2022 and 2021 respectively from its Top 10 Customers. It is an innovation driven enterprise and produces new products which attracts higher cost. Thus, the cost of the new product is comparatively higher than the usual product. This thus raises the price of the product and thus involves the risk of acceptance by the customer. As a result, number of potential consumers of its products may reduce which will ultimately affect its potential revenue in future to that extent.

Dependent on third party transportation providers: As Manufacturing is its main activity, its success depends on the smooth supply and transportation of the materials and transportation of its trading materials from its suppliers to it/ or its buyers/clients, both of which are subject to various uncertainties and risks. In addition, materials 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 materials which may also affect its business and its results of operation negatively. A failure to maintain a continuous supply of materials to it as well as to its clients in an efficient and reliable manner could have a material and adverse effect on its business, financial condition and results of operations.

Face foreign exchange risk: Its financing agreements include conditions and restrictive covenants that require it to obtain consents from respective lenders prior to carrying out specified activities and entering into certain transactions. Its lenders require it to obtain their prior approval for certain actions, which, amongst other things, restrict its ability to undertake various actions including incur additional debt, declare dividends, amend its constitutional documents, change the ownership or control and management of its business. It cannot assure that it will be able to obtain approvals to undertake any of these activities as and when required or comply with such covenants or other covenants in the future.

Outlook

TBI Corn, an ISO 9001:2015 and ISO 22000:2018 certified company, is a prominent player in the corn milling industry. Located in the Sangli district of Maharashtra, India, it specializes in the production of good-quality Corn / Maize Grits and related products. The Company offers a diverse range of products, including cleaned and fat-free Corn Grits/Meal, Corn Flakes, Stone-free Broken Maize & Corn Flour and Turmeric Finger, all manufactured without chemical additives or preservatives and GMO-free. On the concern side, it does not have long term arrangements with its vendors/suppliers and it operates on a purchase order system. There are no long-term supply agreements for the trading material. Besides, the increase in cost of raw material of its products will affect its ability to maintain the quantity of product in the package. This may lead to have an adverse effect on its business, results of operations and financial condition.

The company is coming out with an IPO of 47,80,800 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 90-94 per equity share. The aggregate size of the offer is around Rs 43.03 crore to Rs 44.94 crore based on lower and upper price band respectively.  On performance front, the company’s total income for the financial year 2022-23 stood at Rs 14,042.26 lakh whereas in Financial Year 2021- 22 the same stood at Rs 10097.26 lakh representing an increase of 39.07%. Its profit after tax for the financial year 2022-23 stood at Rs 686.09 lakh as against Rs 45.16 lakh for the financial year 2021-22. Consequently, its PAT Margin increased to 4.89% in financial year 2022-23 from 0.45% in financial year 2021-22. Meanwhile, the company is dedicated to fostering robust connections with both its suppliers and customers. The commitment to this objective is unwavering, even if it entails short-term drawbacks. Notably, unlike prevalent practices in the industry where contracts are severed due to fluctuating raw material costs, the company, known as TBI, upholds its commitments to all contracts.