Quick look at Astral Poly Technik IPO

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Astral Poly Technik, a manufacturer and provider of CPVC piping and plumbing systems in India since 1999, is open for subscription with a public issue of 29,71,000 equity shares of Rs 10 each at a price of Rs 115 per equity share aggregating Rs 3416.65 lakh.

The issue and the net issue (after allowing for employee reservation) would constitute 26.44% and 25.10% of the post issue paid up capital of the company respectively.

Issue Snapshot

• Offer of 29.71 lakh equity shares of Rs 10 each at Rs 115 per share
• Employee reservation of 1.5 lakh equity shares
• Net offer of 28.21 lakh equity shares
• To raise Rs 34.16 crore by the issue
• Issue closes on Feb 22, 2006
• Net offer to public forms 26.44% of post issue Equity
• Made a pre IPO placement of 4 lakh shares at Rs 104 per share to raise Rs 4.16 crore
• 1.8 lakh shares Placement made to Corporation Bank

Objects of Issue

• To part finance expansion of existing line of business in CPVC pipes
• To increase Piping and fitting capacity in Phase I to 9000 metric tonnes by March 2007
• Second Phase to see capacities increase to 18500 Metric tonnes by June 2008
• To finance manufacturing facilities of new projects of underground systems, and fire sprinkler system anmd astral SWR
• To part finance incremental working capital requirements

Business

• Manufacturer and provider of CPVC piping and plumbing systems
• Manufacturer of pipes and fittings for hot and cold water, industrial and pressure systems application
• Has production facilities at Gujarat and Himachal Pradesh to manufacture plumbing systems
• Manufacture and supply of CPVC and PVC pipes and fittings for plumbing systems and industrial piping system
• Clients: Nagarjuna Const, Sobha Developers, EIH, NTPC, EIL, MRPL, RIL, Cadilla, TISCO, Hindalco, HLL
• Raw materials : PVC and CPVC, PVC is purchased from RIL, CPVC is imported on a year to year basis

FY06

• Net Sales of Rs 51.7 crore
• OPM at 14.39%
• PAT (after Extraordinary Items) Rs 3.87 crore

9 Months FY07

• Net Sales At Rs 64.13 crore
• OPM at 14.9%
• PAT at Rs 5.87 crore

Plans

• Total Expansion plans of Rs 71.12 crore
• Financed by pre-ipo placement, loan and internal accruals
• Taken loans of Rs 20.95 crore
• More than 70% market share in the country in CPVC pipes and plumbing systems
• Exports to Malaysia, Philippines, Sri Lanka, Bangladesh and Bhutan
• Looking at markets in Middle East and Africa

Risk Factors

• Have an Export obligation of Rs 3.56 crore to be met by Nov, 2012, Plan to meet by FY08
• Do not follow practice of entering into specific contracts with distributors
• Are heavily dependent on the success of distribution network and dealerships
• Largely depends on a few suppliers to meet raw material requirements