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Bulkcorp International

• Bulkcorp International is coming out with initial public offering (IPO) of 19,78,800 shares in a price band Rs 100-105 per equity share.
• The issue will open on July 30, 2024 and will close on August 1, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 10 times of its face value on the lower side and 10.50 times on the higher side.
• Book running lead manager to the issue is Swastika Investmart.
• Compliance Officer for the issue is Kinjal Sangani.

Profile of the company

Bulkcorp International is an ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 and BRC certified Company, which is engaged in manufacturing and supply of Food Grade Flexible Intermediate Bulk Container (FIBC) bags. Its manufaout cturing facility meets the requirements set in BRC Global Standard for Packing and Packaging Materials and has achieved certified Grade A. It offers a wide range of customisable packaging solutions FIBC bags (Jumbo Bags) which come in eight variations and container liners. Its manufacturing facility is equipped with the required facilities including machinery, and other handling equipment to facilitate smooth manufacturing process. It endeavors to maintain safety and high hygiene in its premises by adhering to key safety and hygiene norms as specified by BRC.

Its manufacturing facility has an in-house testing laboratory to ensure that the finished products match the quality standards as specified by its customers. All its FIBC bags are manufactured in accordance with ISO 21898 and they have undergone quality tests at well reputed labs. It majorly procures its raw materials from Gujarat. As its manufacturing unit is strategically connected to the National Highway and is located in the midst of a developed industrial area, this provides it with operational advantage as transportation process becomes time efficient.

Proceed is being used for:

• Capital expenditure
• Meeting working capital requirements
• General corporate purpose

Industry Overview

The global FIBC market size is expected to top a valuation of $12.6 billion by the end of 2033, with a CAGR of 5.4% during the forecast period. In the year 2023, the market is expected to generate revenue of $7.5 billion. The global FIBC market is estimated to hold a 1/3rd value share of the global IBC market worth $22 billion in 2022. Flexible intermediate bulk containers (FIBC) that carry at least 750 kg are the most preferred type, estimated by Future Market Insights (FMI). As per the study, the FIBC industry is projected to grow steadily as manufacturers introduce lightweight containers.

The Indian Flexible Intermediate Bulk Container Association states that the FIBC market in India has increased by almost 38% in the last 10 years. The food-grade FIBC is gaining immense traction, registering prominent growth rates. FIBC industry is expected to grow at a CAGR of 6.9% as per the association, FIBC production in India is recorded as 306,996 MT in 2021. The food-grade FIBC production was nearly 28% of the total production of FIBC in India. The total export sales of FIBC from India increased 3 times over the past decade and reached $ 708.48 million from 2020 to 2021. The expansion of various industries and increasing trade activities are propelling the demand for FIBC.

Several industries, including food products & agriculture, pharmaceutical products, and chemicals & fertilizers, have experienced substantial industrialization. This is due to the increased international commerce and several favorable measures by the Indian government. Make-in-India initiatives and industry-specific incentives are boosting the establishment of numerous manufacturing enterprises in India. Hence, the demand for FIBC for effective storage and transportation of goods is surging with the rise of such end-user industries.

Pros and strengths

In-house Manufacturing capabilities: Its manufacturing unit is at Changodar Ahmedabad. Currently, its factory has a production capacity of 4800 M. T. P. A. for FIBC bags. The in-house manufacturing operations enable it to stream line inventory management and production process. This results in maintaining quality, minimization of production time and being cost effective. The company is enhancing its product range as well as enlarging its client base to increase its market presence.

Strong relationship with customers and suppliers: Its focus on maintaining long term business relationship with its customers. It is successful in building a strong client base for its business. Its existing business relations help it in getting repeat business from its customers. This has helped it to maintain a long-term working relation with its customers and improve its customer retention strategy. Its existing business relations with its clients represent a competitive advantage in gaining new clients and increasing its business.

Experienced management team with industry expertise and successful track record: Its Promoters Punit Mahendra Gopalka, Anup Mahendra Gopalka and Sanjay Pandurang Sadavarte have cumulative experience of 35 years in the manufacturing and packaging industry. Its experience, knowledge and human resources will enable it to drive its business in a successful and profitable manner. 

Risks and concerns

Dependent on few numbers of customers: Its top ten customers contribute 92.35%, 90.82%, 96.51% and 92.02% of its total sales for the year ended on March 31, 2024, 2023, 2022 and 2021, respectively. The company is engaged in the business of manufacturing and supplying of FIBC bags. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.

Increases in the prices of raw materials: The key raw material required in manufacturing of FIBC bags is fabric. These fabrics, in turn, are made from polypropylene granules. The pricing of polypropylene is influenced primarily by two factors: the quantity ordered, and the credit period availed. The cost of its raw material depends upon timely payment to its suppliers and amount of quantity ordered with them. If it is not able to make timely Payments or if it could not order sufficient quantity with its suppliers out cost of raw materials may increase resulting in decrease in overall profitability of the company.

Working capital requirements: The business of the company is working capital intensive. The successful operation of its business heavily relies on significant working capital, which is essential for various aspects, including financing project operations, inventory management, and the purchase of raw materials and may continue to so in future also. However, changes in credit terms and payment delays can adversely impact its working capital, resulting in lower cash flows and increased funding requirements. Inadequate financing of its working capital needs may arise due to several factors, such as delays in disbursements under financing arrangements, higher interest rates, increased insurance costs, or borrowing and lending restrictions. Such circumstances could have a material adverse effect on its overall business, financial condition, and prospects.

Outlook

Bulkcorp International is engaged in manufacturing and supply of FIBC bags. Its offers a wide range of customisable packaging solutions FIBC bags (Jumbo Bags) which come in eight variations and container liners. It caters to the requirements of crucial industries such as agriculture, chemical, construction, food, pharmaceutical, and mining. Its customer base is spread across the globe with presence in countries like United States of America, Canada, United Kingdom, South Africa, Ivory Coast, South Korea, Spain, Europe, Egypt etc. On the concern side, the market for its products is competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as technical competence, quality of products, distribution network, pricing and timely delivery. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive.

The company is coming out with a maiden IPO of 19,78,800 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 100-105 per equity share. The aggregate size of the offer is around Rs 19.79 crore to Rs 20.78 crore based on lower and upper price band respectively. On performance front, the total revenue from operations for the year ended on FY 2023-24 was Rs 4518.25 lakh as compared to Rs 3847.07 lakh during the FY 2022-23. Revenue from operations Increased by 17.45% in FY 2023-24 due to increase in exports sales to USA. Profit after tax Increased to Rs 355.90 lakh in FY 2023-24 from Rs 121.22 lakh in the FY 2022-23. Going forward, it intends to diversify its product portfolio which could cater to customers across segments, sectors, and geographies. In accordance with this, it intends to further diversify into products with prospects for increased growth and profitability. The company foresees an increase in demand of its packaging products and in order to tap the growing markets.