Initial Public Offering(IPO) Of Prince Pipes Opened For Subscription
Prince Pipes has entered into Initial Public Offer(IPO) of Rs 500 Crore on December 19th with a price band at Rs 177 to Rs 178 per share. Mr. Parag Chheda, the executive director of Prince Pipes has spoken in an interview with CNBC TV18 shared the complete details of the company and the issue.
Q: You are raising funds to the Telangana Plant and to reduce the leverage at the promoter level. Give us the details about this particular plant. What is the investment required? What kind of capacity are you looking to increase?
On this, Mr. Parag said ” we are planning to raise Rs 180 Crores for the Telangana Plant and this is would be a state of the art technology. Firstly we have to understand that logistics cost plays a major role. So we need to have an injection molding footprint in the southern zone. The initial capacity we likely to have about 52,000 productions”.
Q: The production capacity around 52,000 turns but in terms of revenue potential what kind of revenue are you looking from Telangana Plant?
He further started saying that the total revenue expected out of the entire injection molding from our Telangana Plant would be about 250 to 300 Crores in two to three year’s time.
Q: Can you tell us debt at the promoter level. Would you able to pay off completely from the funds you received from the IPO?
For this, he replied the promoter debt is in the dimensions of Rs 200 Crores because we have the secondary offer for sale(OFS) which is in the tune of Rs 250 Crores by which we would be zeroing down the promoter level debt.
Q: What is the overall debt situation company included look like the post the IPO?
Furthermore, he added that the current or net debt to the tune of Rs 300 Crores and we likely to repay the Rs 50 Crores through our IPO proceeds. So it shall be Rs 250 Crores.
Q: The revenue growth has been quite volatile. If you look at the last years in FY16 it was 5 percent and it is 24 percent in FY17 but came down to around 5 percent in FY18 and 20 percent in FY19. What is the outlook for revenue growth with the margins going forward?
The market expert Mr.Parag said that we have to understand that the value growth is also depending upon the raw material prices and in case if there is an increase we need to pass on or incase if there is a decrease accordingly the prices have to be passed on. What is more important is the volume growth and the company has been growing consistently with about 12-15 percent year on year(YOY) in terms of the volume growth. And in a similar way, we expect that these numbers are going to be sustainable in the coming times.
Q: Looking at the volume growth 12 to 15 percent but which sector is ready to drive this growth going forward?
For that, he said presently the company provides its services to various sectors like agriculture, irrigation, plumbing, drainage, and sewage. The most successful sectors in the coming days are plumbing and drainage.
Q: Prince has 40 percent sales in North India there was a construction ban in northern areas. Could you tell us that it impacts your business?
Mr.Parag answered to that question that we have to understand that the company has catered to various products like agriculture, plumbing that I have mentioned above. The company mainly focus on drainage which was above the ground. While the other companies are providing the services below the surface. So in those terms, there will be no impact on our business. And we are optimistic that the revenues coming from the north we continue around 37 to 40 percent.