Prevest DenPro, a Jammu-based dental material manufacturer, made an impressive debut on the BSE SME platform on September 27, opening at Rs 180.55, a 115 percent premium over the issue price of Rs 84.
Set up by chemical engineer-turned-entrepreneur Atul Modi in 1999 in Jammu’s Digiana locality, the company, which manufactures products for dental applications, has over the last two decades developed into a major international player. Today, it operates from a state-of-the-art manufacturing unit at the Bari Brahmana Export Promotion Industrial Park in Jammu, manufacturing 100 products with exports to more than 80 countries.
Through its debut on the capital market, Prevest DenPro has become the first company from Jammu and Kashmir to list on the BSE SME platform. Among other listed companies from the Union Territory, Jammu and Kashmir Bank is listed on main board of both the exchanges while Sarveshwar Foods is listed on NSE.
In an exclusive interview with MoneyControl, Modi, 68, the founder, Chairman and Managing Director of Prevest DenPro, spoke about the firm’s journey, what the listing means and how he wants to transform it into a Rs 500 crore company in the next ten years. Edited excerpts:
Did you expect such a stellar debut? What explains the listing gained?
In 1999 when we started, I had no idea that I would see a day when the market would respond so overwhelmingly. I believe this only speaks about our company’s reputation among our customers.
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You know, we are the first dental appliances company on the stock exchange. This was unheard of before for people. That is encouraging for all of us. Everybody is confident that we have a bright future.
What made you start the dental material business in Jammu?
In Jammu, my hometown, we get good quality gypsum. Our first product, a special type of plaster of Paris or dental stone, made using local gypsum and technology from the Indian Institute of Integrative Medicines, Jammu, was taken well. Since most of these products were imported, we realised there is abundant scope and the journey started.
Where are your customers and what's the scope of the market?
Our customers are basically dentists. But we can’t supply directly to 5 lakh dentists in India, not to mention outside the country. So, we depend on a network of distributors — 50 in India and one each in 80 countries. The market is growing worldwide. We are confident that over the next one year we will add 20 countries to the list.
How is the business climate in J&K? What are the challenges in operating there?
Initially, we faced challenges in selling the products in India because of a trust deficit. We had a hard time convincing people and making them believe that we were manufacturing products in India and not getting them from outside the country
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We still face some challenges, such as being far away from any port. But the good thing is that our customers are ready to bear the freight cost.
Has there been any improvement in the ease of doing business in J&K, especially after the revocation of Article 370 in 2019?
Definitely. The government is proactive in the development of industries by offering incentives. We have low power rates compared to other States.
What made you choose an SME IPO instead of other sources of financing?
See, at present our company is debt-free. We manage the business with our internal resources and work on 100 per cent advance payments. We do not rely on any bank loans. Now, since we have decided to expand, we need to have new capacity and thus we have adopted public funding. We plan to set up a state-of-the-art research centre. For a project of about 35 crore we decided to consume internal funds partly and take about 26.5 crore from public funding.
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After the expansion, we will need a new facility in the next 4-5 years that will require a capital investment of Rs 150 crore. And if we go to the market then, investors should know us. With focus on Research and Development, business of our company will grow to Rs 500 in the next decade. So, we cannot depend just on bank financing.
What kind of business growth do you see? Have you crossed pre-pandemic levels of business?
From one product in 1999-2000, we are today manufacturing 100 products. Our business has been growing consistently at the rate of 20 percent in the last five years. Even during the pandemic, our business grew 20 percent. That is why we are confident that our growth will accelerate in normal times. Now, our focus is on penetrating the market and competing with multinationals. We will soon become the first dental appliances company in India to have a patented product.
Almost a third of SME listings on the BSE have transitioned to the main board. When do you see that happening for you?
As I said earlier, we are planning for a second phase of expansion. That will happen after two years. It will only be possible when we migrate to the main board. I think it will take two years’ time to complete our ongoing expansion, diversification, and (develop) familiarity with the stock exchange.