Tolins Tyres files draft papers for Rs 230-crore IPO plan

Tolins Tyres files IPO papers

Kerala-based Tolins Tyres has filed preliminary papers with the capital markets regulator SEBI to raise Rs 230 crore through an initial public offering.

As per the draft papers filed on February 16, the IPO will be a mix of fresh issuance of equity shares worth Rs 200 crore, and an offer-for-sale (OFS) of shares worth Rs 30 crore by promoters.

Promoters Kalamparambil Varkey Tolin, and his wife Jerin Tolin will be the selling shareholders in the OFS, offloading Rs 15 crore worth of shares each.

Promoters own 92.64 percent shares in the manufacturer of tyres and tread rubber, and the remaining 7.36 percent shares are held by the public shareholders.

The company may raise Rs 25 crore in a pre-IPO placement, before the filing of the red herring prospectus with the Registrar of Companies.

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The Tolin family-owned firm will spend Rs 62.55 crore of the net fresh issue proceeds for repaying debts and Rs 75 crore for long-term working capital requirements. The total debt on its books stood at Rs 95.09 crore as of January 2024.

Further, Rs 24.37 crore will be invested in a wholly-owned subsidiary, Tolin Rubbers. Of which, Rs 16.37 crore will be utilised for repaying the subsidiary's debt, and Rs 8 crore towards its working capital requirements. The remaining fresh issue money will be kept for general corporate purposes.

Under the Tolins Tyres brand, the company sells tyres to light commercial vehicles, agricultural vehicles and two/three-wheeler manufacturers, primarily in India and exports to the Middle East, the ASEAN region, and Africa. At present, it is exporting to 18 countries and export revenue contributed to 9.01 percent of its total revenue from operations in the year ended March FY23.

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Incorporated in 1982, the tyre retreading solutions provider operates its business from three manufacturing facilities, of which two are in Kalady, Kerala and the third one is in Ras Al Khaimah in UAE.

Currently, it 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. Currently, it is operating at an average capacity utilization of around 25 percent and intends to increase the capacity utilisation up to 75% in the next few years.

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Tolins Tyres, which competes with listed peers like Indag Rubber, Vamshi Rubber, TVS Srichakra, GRP, and Elgi Rubber, has recorded standalone net profit at Rs 4.99 crore for the year ended March FY23, against Rs 0.63 crore in previous year, and during the same period, its revenue from operations increased to Rs 118.3 crore, from Rs 113.4 crore.

Saffron Capital Advisors is the sole book-running lead manager to the issue.