IGI Logo

Shri Techtex 

• Shri Techtex is coming out with a 100% book building; initial public offering (IPO) of 74,00,000 shares of Rs 10 each in a price band Rs 54-61 per equity share.
• The issue will open for subscription on July 26, 2023 and will close on July 28, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 5.40 times of its face value on the lower side and 6.10 times on the higher side.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Akanksha Aswani.

Profile of the company

The company is engaged in the business of manufacturing of Polypropylene (PP) Non-Woven Fabric. The practical use of non-woven fabric is more ecological for certain applications, especially in fields and industries where disposable or single use products are important, such as organic farming, hospitals, health care, nursing homes, home furnishing, vehicle upholstery seat fabrication, Mattress & furniture covering, ecological packaging, industrial and consumer goods. It manufactures PP non-woven fabric in variety of sizes and density. Its manufacturing facility is situated at Simaj of Dholka Taluka in Ahmedabad District of Gujarat. The manufacturing facility is well connected with near about transport hubs.

In past, since FY 2011, as a Partnership firm, it was engaged in the business of industrial trading activity in Polymers, Chemicals, Packaging Materials and other allied products. Upon conversion of Partnership Firm to company, the company continued manufacturing on job work basis and in the initial phase it was engaged in job work basis exclusively for its group companies. However, with effect from April 01, 2021, as a result of demerger, the said business of contract manufacturing was transferred to resultant company Aurum Fabritech Private Limited (Aurum Fabritech Private Limited was converted to LLP with effect from February 02, 2022). After the demerger, till date, the COMPANY is engaged in the business of manufacturing of Polypropylene (PP) Non-Woven Fabric.

Proceed is being used for:

• Construction of factory shed
• Purchase of machineries
• Commissioning of solar plant
• Meeting working capital requirements
• General corporate purpose
• Meeting public issue expenses

Industry overview

Technical Textiles have seen an upward trend globally in the recent years due to improving economic conditions. Technological advancements increase in end-use applications, cost-effectiveness, durability, user-friendliness and Eco friendliness of Technical Textiles has led to the upsurge of its demand in the global market. Indutech, Mobiltech, Packtech, Buildtech and Hometech together represent 2/3rd of the global market in value. 

The demand for Technical Textiles was pegged at $165 billion in the year 2018 and is expected to grow up to $220 billion by 2025, at a CAGR of 4% from 2018-25. The Asia-Pacific has been leading the Technical Textiles sector by capturing 40% of the global market, while North America and Western Europe stand at 25% & 22% respectively Asia-Pacific has seen a tremendous growth in this sector and captures the largest market share due to rapid urbanisation and technological advancements in medical, automobile and construction industries. This is further catalysed by easy production, low-cost labour and conducive government policy support.

The current Indian technical textiles market is estimated at $19 billion, growing at a CAGR of 12% since past five years. It contributes to about 0.7% to India’s GDP and accounts for approximately 13% of India’s total textile and apparel market. In 2017-18, Packtech segment had the highest share of 41%, followed by Indutech, Hometech, and Mobiltech with a share of 11%, 10% and 10%, respectively. 

Pros and strengths

Prime location of manufacturing facility and installed capacity: Its Manufacturing Facility is located at village Simaj in Dholka Taluka in Ahmedabad District of Gujarat. Its Manufacturing facility is well equipped with necessary infrastructure facilities such as power, roads facilities, water etc. The Manufacturing Facility is strategically located. Its manufacturing units enjoy the good connectivity through National Highway roads and railway, which makes the movements of the raw material as well as finished goods easy and comfortable. Thus, it helps with smooth procurement of raw material from the suppliers and delivery of finished goods to the customers. The vicinity advantage adds to the cost effectiveness and reliability for its suppliers and customers. 

Infrastructure and integrated capabilities to deliver quality products: It is in requirement of new machineries due to addition of new product line in its existing product portfolio and it needs to be updated with the new technology, with its staff members and customer demand it does updating as and when required. Its aim is to continuously earn customer's trust and confidence through personal attention and hence the output of the product as per customer requirement is the foremost thing which shall be considered and attended through technology mode.

Wide application of products: Its products are widely used in various application for Geotextile, Horticulture, Furniture, Construction and Healthcare etc. This benefits it from less dependency on one industry, which ultimately helps it in achieving strong financial growth. 

Risks and concerns

Dependent on few numbers of customers: Business of its company is dependent on few numbers of customers. It top five customers Contributes 94.08%, 94.09% and 89.05% of its total sales for the year ended March 31, 2023, March 31, 2022, and 2021 respectively on Restated Basis. Out of total sales, sales to its group company / related parties constitutes ,36.26%, 7.64% and 49.32% of its total sales for the year ended March 31, 2023, March 31, 2022, and 2021 respectively. There is no assurance that it will be able to get the job work / sales from its Group Company / related parties and external customers in any future periods, the loss of income from job work will have material and adverse effect on its business and results of operations.

Changes in technology:  Its future success will depend in part on its ability to respond to technological advances and emerging textile Industry standards and practices on a cost-effective and timely basis. Changes in technology and product preferences may make newer textile units or equipment more competitive than it’s or may require it to make additional capital expenditures to upgrade its facilities. If it is unable to adapt in a timely manner to changing market conditions, customer requirements or technological changes, its business, financial performance and the trading price of its Equity Shares could be adversely affected.

Dependent on few numbers of suppliers: Its top five suppliers contributed 69.69%, 97.93% and 100% of its total purchase of year ended on March 31, 2023, March 31, 2022 and March 31, 2021 respectively on Restated Basis. Out of total purchase from various parties, purchase from related parties were 25.83%, 68.22% and 98.54% of its total purchase of year ended on March 31, 2023, March 31, 2022 and March 31, 2021 respectively on Restated Basis. It cannot assure that it will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from its group company and other vendors which may adversely affect its purchases of stock and ultimately its revenue and results of operations.

Outlook

Incorporated in 2011, Shri Techtex is engaged in the business of manufacturing of Polypropylene (PP) Non-Woven Fabric. The practical use of non-woven fabric is more ecological for certain applications, especially in fields and industries where disposable or single use products are important, such as organic farming, hospitals, health care, nursing homes, home furnishing, vehicle upholstery seat fabrication, Mattress & furniture covering, ecological packaging, industrial and consumer goods. On the concern side, its future success will depend in part on its ability to respond to technological advances and emerging textile Industry standards and practices on a cost-effective and timely basis. Changes in technology and product preferences may make newer textile units or equipment more competitive than it’s or may require it to make additional capital expenditures to upgrade its facilities

The issue has been offered in a price band of Rs 54-61 per equity share. The aggregate size of the offer is Rs 39.96 crore to Rs 45.14 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations for the FY 2022-23 was Rs 5692.39 lakh as compared to Rs 5117.63 lakh during the FY 2021-22 showing an increase of 11.23%. Profit after Tax (PAT) increased from Rs 826.56 lakh in the FY 2021-22 to Rs 910.63 lakh in FY 2022-23 showing increase of 10.17%. Going forward, the company is planning for business expansion by adding new business lines viz. Manufacturing of Hot melt Coating Lamination and PP Multifilament Yarn. The company expects both machineries to be ready for commercial production by April 2024 having installed capacity of 3360 tons and 1200 tons per annum respectively.