Kerala's Tolins Tyres Aims for ₹230 Crore IPO to Expand, Reduce Debt

19 Feb 2024 , 09:12 AM

Kerala-based Tolins Tyres has taken a significant step towards entering the capital markets by filing preliminary papers with the capital markets regulator SEBI to raise ₹230 Crore through an initial public offering.

According to the draft papers filed on February 16, the IPO will comprise a combination of fresh issuance of equity shares worth ₹200 Crore and an offer-for-sale (OFS) of shares worth ₹30 Crore by promoters. Promoters Kalamparambil Varkey Tolin and his wife Jerin Tolin will be the selling shareholders in the OFS, each offloading ₹15 Crore worth of shares.

The promoters currently hold 92.64% shares in the company, while the remaining 7.36% shares are held by public shareholders. Additionally, the company may raise ₹25 Crore through a pre-IPO placement before filing the red herring prospectus with the Registrar of Companies.

Of the net fresh issue proceeds, Tolins Tyres plans to allocate ₹62.55 Crore for repaying debts and ₹75 Crore for long-term working capital requirements. The company’s total debt stood at ₹95.09 Crore as of January 2024.

Furthermore, ₹24.37 Crore will be invested in its wholly-owned subsidiary, Tolin Rubbers, with ₹16.37 Crore allocated for debt repayment and ₹8 Crore for working capital requirements. The remaining fresh issue funds will be allocated for general corporate purposes.

Under the Tolins Tyres brand, the company manufactures tyres for light commercial vehicles, agricultural vehicles, and two/three-wheeler manufacturers, primarily in India, with exports to the Middle East, ASEAN region, and Africa. Its export revenue contributed 9.01% of its total revenue from operations in the fiscal year ended March FY23.

Established in 1982, Tolins Tyres operates from three manufacturing facilities, two in Kalady, Kerala, and one in Ras Al Khaimah, UAE. It currently has a production capacity of 1.51 million per annum tyre capacity, 12,486 tons per annum of tread rubber capacity, and 17,160 tons per annum of rubber compounds. The company aims to increase its capacity utilization from the current average of 25% to 75% in the coming years.

Tolins Tyres, competing with listed peers like Indag Rubber, Vamshi Rubber, TVS Srichakra, GRP, and Elgi Rubber, reported a standalone net profit of ₹4.99 Crore for the fiscal year ended March FY23, up from ₹0.63 Crore in the previous year. During the same period, its revenue from operations increased to ₹118.3 Crore from ₹113.4 Crore.

Saffron Capital Advisors has been appointed as the sole book-running lead manager to the issue.