Mehul Colours
- Mehul Colours is coming out with an initial public offering (IPO) of 30,08,000 equity shares in a price band Rs 68-72 per equity share.
- The issue will open on July 30, 2025 and will close on August 1, 2025.
- The shares will be listed on SME Platform of BSE.
- The face value of the share is Rs 10 and is priced 6.80 times of its face value on the lower side and 7.20 times on the higher side.
- Book running lead manager to the issue is Seren Capital.
- Compliance Officer for the issue is Shilpa Karan Mehta.
Profile of the company
Mehul Colours is primarily engaged in the manufacturing of masterbatches, which are used in the plastics industry to impart colour and enhance the functional properties of plastic products. Masterbatches are concentrated mixtures of pigments and additives that are uniformly dispersed in polymer carriers, facilitating the effective integration of colour and performance-enhancing properties into plastic products. During plastic processing, masterbatches enable the uniform dispersion of pigments within the plastic resin, ensuring consistent colour distribution throughout the final plastic product without uneven patches or variations. They are also used to enhance visual appearance and impart specific properties to plastic materials such as UV resistance, flame retardancy and antistatic behavior.
In Fiscal 2025, it supplied its masterbatches to over 500 customers spanning a broad array of industries, including stationery, plastic household products, plastic toys, agricultural tools, pipes and fittings, packaging materials, wires & cables, electrical switches & accessories, sheets and various other plastic products. In addition to manufacturing masterbatches, the company is also engaged in the sale of pigments, which are blended by it to create customized pigment solutions tailored to specific industry and customer requirements. Pigments are solid colourants in fine particle form that provide colour to plastic products.
Its product line includes colour masterbatches, additive masterbatches, special effect masterbatches and filler masterbatches to meet specific functional and aesthetic needs in plastic manufacturing. Colour masterbatches ensure uniform and consistent colouration across plastic products. Additive masterbatches enhance the durability, functionality and processability of plastics by imparting essential properties such as UV protection, slip resistance, tackiness, flame retardancy, impact strength and improved extrusion capabilities. These include UV Stabilizers, Slip/Anti-block agents, PIB Masterbatch, Flame Retardants, Impact Modifiers and PPA Masterbatch. Special effect masterbatches, offering finishes like pearl, metallic, sparkle, glitter, fluorescent and wood effects, alter the visual and tactile characteristics of plastics. Filler masterbatches, primarily composed of calcium carbonate (CaCO?), talc, or other mineral fillers, are used to enhance rigidity and processing efficiency.
Proceed is being used for:
- Funding of capital expenditure towards setup of a new manufacturing facility
- Funding of working capital requirements
- General corporate purpose
Industry Overview
India’s chemical industry is extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilizers. India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to India’s GDP. The Indian chemical industry is currently valued at $220 billion and is expected to reach $300 billion by 2030 and $1 trillion by 2040. This industry remains an active hub of opportunities, even in an environment of global uncertainty. The chemical industry is expected to contribute $383 billion to India’s GDP by 2030. By 2030, India is likely to have 80% of the households in the middle-income group. The growing middle-class and increasing urbanization is driving the demand for personal care, agrochemicals, food, paints & coatings resulting into higher consumption of chemicals per capita. The Indian chemical industry is currently valued at $220 billion and is expected to reach $300 billion by 2030 and $1 trillion by 2040. This industry remains an active hub of opportunities, even in an environment of global uncertainty.
Meanwhile, the Indian plastic industry is one of the leading sectors in the country’s economy. The history of the plastic industry in India dates back to 1957 with the production of polystyrene. Since then, the industry has made substantial progress and has grown rapidly. The industry is present across the country and has more than 2,500 exporters. It employs more than 4 million people in the country and constitutes 30,000 processing units; among these, 85-90% belong to small and medium enterprises. India manufactures various products such as plastics and linoleum, houseware products, cordage, fishnets, floor coverings, medical items, packaging items, plastic films, pipes, raw materials, etc.
India’s plastic exports stood at $2.93 billion in FY-25. During this period, the exports of plastic films & sheets, FIBC woven sacks woven fabrics & tarpaulin and Packaging items - flexible rigid grew by 24.9%, 11.9% and 10.4%, respectively, over the same period last year. Further, the total plastic exports from India to France during 2022-23 was around US$ 211.4 million. To boost exports to France and Europe, PLEXCONCIL collaborated with the Indo-French Chamber in the first quarter of 2021-22. The Minister for Commerce and Industry, Piyush Goyal, recently urged industry to adopt international standards to help it expand its global footprint. India has recently signed a free-trade agreement with UAE and Australia, which will give the plastics industry new opportunities.
Pros and strengths
In-house manufacturing facilities with integrated testing & R&D capabilities: Its manufacturing operations are carried at two production facilities within the Tungareshwar Industrial Estate, Palghar, Mumbai, having combined built up area of around 6,400 sq. ft., which support the production of customer-specific masterbatch solutions. Its units are equipped with requisite machineries to carry on the compounding and extrusion processes, essential for producing tailored masterbatch solutions. Its manufacturing facility located 12 to 15, Tungareshwar Industrial Estate, Palghar also has a dedicated laboratory to carry on the R&D activities, quality control, testing and product development. This laboratory is equipped with necessary machines and instruments for quality control, testing and product development, ensuring compliance with industry standards and customer specifications.
Well diversified customer base spread across various industries & geography: The company provides a range of colouring solutions for the plastics industry, including black, white and colour masterbatches, special effects masterbatches, additive masterbatches, filler masterbatches and pigments. its products are used across various plastic applications in multiple industries. The diversified usage of its products allows it to serve a wide customer base, support different manufacturing needs and cater to various end-use applications across sectors.
Long term relationship with the customers: It has over the years established long-term relationships with certain of its customers leading to recurrent business engagements with them. Some of its customers have been with it for the last 5 fiscals. The longstanding relationships that it has enjoyed with certain of its customers over the years has helped it to grow. In addition, it has a sales and marketing team dedicated to nurturing these relationships, driving customer satisfaction, and expanding its market presence.
Risks and concerns
Maximum revenue comes from few customers: A considerable portion of its revenue is derived from a limited number of key customers, making its business partially dependent on their continued association. For the financial years ended March 31, 2025, 2024 and 2023, its top ten customers contributed 48.19%, 49.99% and 56.38% of its revenue from operations, respectively. Any decline in orders, delays, cancellations, inability to negotiate favorable terms, or the loss of a major customer could have a material adverse impact on its financial condition, operational performance and future growth prospects.
Geographical constrain: The company operates its manufacturing facilities located at Palghar, Maharashtra. Due to the geographical concentration of its manufacturing operations in Palghar district, its operations are susceptible to local, regional and environmental factors, such as social and civil unrest, regional conflicts, civil disturbances, economic and weather conditions, natural disasters, demographic and population changes and other unforeseen events and circumstances. Such disruptions could result in the damage or destruction of a significant portion of its manufacturing abilities, significant delays in the transport of its products and raw materials, loss of key managerial personnel or senior management personnel and/or otherwise adversely affect its business, financial condition and results of operations.
Derived a significant portion of revenue from the sale of key product i.e. Masterbatches: The company generates a significant portion of its revenue from its key product i.e. Masterbatches which contributed 84.17%, 82.29% and 79.23% of its revenue from operations for the Fiscal years 2025, 2024 and 2023 respectively. Masterbatches are concentrated mixtures of pigments and additives that are uniformly dispersed in polymer carriers, facilitating the effective integration of colour and performance-enhancing properties into plastic products. Any decline in the sales of masterbatches on account of any reason including increased competition, evolving customer preferences, pricing pressures or supply chain disruptions, or shifts in industry trends may adversely affect its business, results of operations and financial condition.
Outlook
Mehul Colours is engaged in the manufacturing and exporting of masterbatches in India. The company offers a diverse range of products, including white, black, color, and additive masterbatches, catering to various applications in plastics, rubbers, and elastomers. The company has in-house manufacturing facilities with integrated testing & R&D capabilities. On the concern side, substantial portion of its revenue has been dependent upon few customers with which it does not have any firm commitments. The loss of any one or more of its major customers would have a material adverse effect on its business, cash flows, results of operations and financial conditions. Moreover, the company derived a significant portion of its revenue from the sale of its key product i.e. Masterbatches. Any decline in the sales of its key offering could have an adverse effect on its business, results of operations and financial condition.
The company is coming out with a maiden IPO of 30,08,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 68-72 per equity share. The aggregate size of the offer is around Rs 20.45 crore to Rs 21.66 crore based on lower and upper price band respectively. On performance front, in FY 2025, the revenue from operations was Rs 2,282.20 lakh, showing a significant increase from Rs 2,193.64 lakh in FY 2024, reflecting an increase of 4.04%. Moreover, the company’s profit after tax increased by 71.00%, rising from Rs 321.82 lakh in the financial year 2023-24 to Rs 550.30 lakh in the financial year 2024-25.
The company plans to expand its product portfolio by introducing polymer compounds alongside its existing masterbatches, targeting new as well as the existing customer base for operational synergy. Polymer compounds are ready-to-use plastic granules formulated for specific industry requirements. These compounds are used in automotive, engineering plastics, flame-retardant applications, thermoplastic elastomers and electrical cables, providing properties such as mechanical strength, fire resistance and electrical insulation. This expansion will enable the company to secure new orders from existing and potential customers, capitalizing on market opportunities and drive revenue growth.
