Automark Industries plans 1.25 cr shares IPO for expansion

Road marking materials manufacturer Automark Industries plans to tap capital market with its initial public offering of 1.25 crore equity shares of face value of Rs 10 each, by diluting 42.6% stake post issue. The company has filed draft red herring prospectus with SEBI.

Company may also consider a pre-IPO placement of upto 25 lakh shares, prior to the filing of the red herring prospectus with the RoC.

Automark is engaged in the business of manufacturing of thermoplastic road marking materials, primers for application of thermoplastic road marking materials on concrete roads, water borne marking paints, cobralite retro reflective paint.

It also manufactures road marking machineries which are used in the application process of road marking paints.

Company plans to use the issue proceeds for purchasing of road marking machines to increase the contracting capacity (at cost of Rs 18.21 crore) and setting up a plant for manufacture of thermoplastic road marking machines (cost of Rs 1.88 crore).

With the IPO money, it is also going to setup thermoplastic road marking materials manufacturing and contracting facility in Kenya/Uganda to service the market of COMESA (at cost of Rs 5.76 crore); and implement Enterprise Resource Planning (ERP) system in the organization (at cost of Rs 50 lakh).

Company will invest some portion in subsidiary, namely Automark Technologies (India) Private Limited (ATPL) for funding capital expenditure (Rs 9.67 crore) and will keep some money for working capital requirements (Rs 32 crore).

Turnover of the company, on a standalone basis, increased 393% from Rs 13.17 crore in FY2006-07 to Rs 64.96 crore in FY2010-11. Profit after tax during the same period jumped 934% to Rs 1.66 crore.

For the fiscal year ended March 2011, it reported a net profit of Rs 189.61 lakh on total income of Rs 68.42 crore.

Comfort Securities Limited is the book running lead manager to the issue.