Upcoming SME IPO_Ushanti Colour Chem Limited

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Ushanti Colour Chem Limited IPO

Issue Analysis :

Issue opens July 23, 2018
Issue Closes July 25, 2018
Issue Price Rs 57-60
Lot Size 2000
Issue Size 11.56 Cr
Lead Manager PANTOMATH CAPITAL ADVISORS PRIVATE LIMITED
Registrar Bigshare Services Pvt. Ltd
Platform NSE

Company’s Snapshot :

Incorporated in 1993, Gujarat based Ushanti Colour Chem Limited is a company engaged in the business of manufacturing and trading of Dyestuffs.

The Company manufactures Reactive and Direct Dyestuffs also known as Synthetic Organic Dyes. It also manufactures Copper Phthalocyanine, Blue Crude which is used for manufacturing of Dyestuffs. The pigment and dyestuffs cater to the raw material requirement of various industries including wool, ink, wood, leather, nylon, paper, textile, garment, cotton, plastic and paint etc.

The company has 3 manufacturing facilities, spread over 2,739 sq. meters, located at Vatva GIDC in Gujarat. It also has its own Ice generation machinery. It recovers Ammonium Carbonate which is reused in the plant as well as sold to the Soda Ash Industry reducing wastage providing the company with incremental revenue.

The Monthly Production capacity of the company increased from 5 MT in 1990 to 300 MT now. With the new capacity addition, production will be 1350MT.

With land of 3000sq. mt, at Vatwa & 75000sq. mt land at Saykha, the company’s enterprise value is around Rs 45-50 crore.

Ushanti generates around 41% of its revenue from the Domestic market while the rest 59% is generated from its export operations.

Ushanti offers its products through traders. The manufactured dyes are sold as per the orders received by parties either directly from manufacturers or traders.

New Project Features

Expansion Phase I & II : Turquoise Blue Dyestu, Pigments & Intermediates

  1. Highly Profitable.
  2. For Backward Integration Project, no pressure to sell & not much working capital

required.

  1. China has almost stopped production of Intermediates and Dyestuffs
  2. With production of Intermediates with Dyestus/Pigments, Ushanti will be extremely

competitive in “Turquoises”

 

Phase III : (other products)

  1. Phase I & II projects’ production will stabilize by 2020-21. Phase III of the project, for other products, will be started thereafter.
  2. Funding for Phase III will be through an FPO of Rs 100 crores approx. after migration to the main board.

Other Features

  1. Vertical expansion: All plants will have Dyestu /Pigment units with their intermediates to ensure cost competitiveness.
  2. Scale: Huge economies of scale with plant size 5-10 times the size of its Vatwa Plants

Strengths of the company-

  1. Over 50 years of experience, manufacturing since 1979
  2. Consistent profits with PAT of Rs. 2.38 Cr in 2017-18
  3. Operates in a niche market for Turquoise Blue. There are very few plants worldwide producing Turquoise Blue. Even fewer plants with their own intermediates. The company’s expansion plan is focussed on Turquoise Blue Dyestu/Pigments with Backward Integration Plants.
  4. Good cost reduction plans on Energy and Pollution treatment. Only CNG is allowed in Vatwa while all fuels allowed in Saykha would result in a 50% reduction in energy costs. The company plans to leverage its huge land available resources and enable conversion of waste to reusable products thus reducing costs on pollution treatment.
  5. Part of Sunrise Industry. The shifting of production of dyestuff/pigment from China to India has had a huge bearing on turnover and profits for the industry.

 

Object of the Issue:

The objects of the Issue are:

 

  1. Setting up of Dyestuff, Pigment, Intermediate Manufacturing facility at Saykha
  2. Prepayment of installments on land taken at Saykha, GIDC & repayment of Secured

Bridge Loan taken from Banks for acquiring land for the new project

  1. General Corporate Purpose

 

Financial Highlights :

Summary of financial Information (Restated)
Particulars For the year/period ended (in Rs. Lakhs)
31-Dec-17 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14 31-Mar-13
Total Assets 2,702.27 2,273.94 2,238.70 2,022.31 1,889.78 1315.76
Total Revenue 2742.60 2,962.10 2,511.31 2,970.96 3,541.98 2,414.66
Profit After Tax 245.00 137.78 37.97 28.36 222.00 51.01

 

Company Promoters:

The Company is promoted by Maunal Gandhi and Minku Gandhi. The promoters hold, in aggregate 27,02,854 Equity Shares representing 50.28% of the pre-issue paid up Capital of the Company.

 

Contact Company Information:

Ushanti Colour Chem Limited

88/6, 88/7, 88/8,
Phase – 1, GIDC,
Vatwa, Ahmedabad – 382445
Phone: 079-25833315
Email: admin@ushanti.com
Website: http://ushanti.com/

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