Standard Glass Lining Technology Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

The company ranks among the top five specialized engineering equipment manufacturers for the pharmaceutical and chemical sectors in India by revenue in Fiscal 2024. It possesses comprehensive in-house capabilities spanning the entire value chain, including design, engineering, manufacturing, assembly, installation, and commissioning. Additionally, the company provides turnkey solutions, including the establishment of standard operating procedures for pharmaceutical and chemical manufacturers.

Its product portfolio encompasses core equipment essential for manufacturing pharmaceutical and chemical products, categorized into:
(i) Reaction Systems,
(ii) Storage, Separation, and Drying Systems, and
(iii) Plant, Engineering, and Services (including ancillary components).

The company is also recognized as one of India's top three manufacturers of specialized engineering equipment made from glass-lined, stainless steel, and nickel alloy, based on revenue in Fiscal 2024. Furthermore, it is among the top three suppliers of polytetrafluoroethylene (PTFE)-lined pipelines and fittings in India, also by revenue in the same fiscal year.

IPO Details:

Objectives of Issue:

• Funding of capital expenditure requirements of the Company towards the purchase of machinery and equipment;
• Repayment or prepayment, in full or in part, of all or a portion of certain outstanding borrowings availed by the Company and investment in the wholly owned Material Subsidiary, S2 Engineering Industry Private Limited, for repayment or prepayment, in full or in part, of all or a portion of certain outstanding borrowings availed by S2 Engineering Industry Private Limited, from banks and financial institutions;
• Investment in the wholly owned Material Subsidiary, S2 Engineering Industry Private Limited, for funding its capital expenditure requirements towards purchase of machinery and equipment;
• Funding inorganic growth through strategic investments and/or acquisitions and
• General corporate purposes

Key Strengths:

• Customized and innovative product offering across the entire pharmaceutical and chemical manufacturing value chain – The company is among the select few in India providing end-to-end customized solutions for specialized engineering equipment catering to the pharmaceutical and chemical sectors. As of September 30, 2024, its extensive product portfolio includes over 65 products and solutions tailored to the needs of these industries.With the ability to address customized process requirements and execute large, complex projects, the company serves as a single point of contact for a wide range of equipment. Furthermore, it stands as the sole supplier of stainless steel glass-lined reactors in India with the capability to manufacture units with capacities of up to 10KL.
• Long term relationships with marquee clientele across sectors – The company has successfully built long-standing relationships with several marquee clients in the pharmaceutical and chemical industries within a relatively short timeframe. Its ability to deliver customized solutions tailored to clients' specific requirements, combined with technical expertise and a strong track record of timely order fulfillment, has been instrumental in fostering these enduring partnerships across its product categories.As of September 30, 2024, the company maintains relationships exceeding three years with 13 of its top 20 customers. Additionally, it has consistently secured repeat business, with over 80% of its top 20 customers placing repeat orders in each of the last three fiscal years and the six-month period ended September 30, 2024

Risks:

• Concentrated Manufacturing Facility– The company operates its business through eight manufacturing facilities located in Hyderabad, Telangana, India. Its operations rely heavily on the efficient management and functioning of these facilities. However, unforeseen events beyond the company's control—such as equipment obsolescence, industrial accidents, power supply disruptions, severe weather conditions, or natural disasters—could significantly impact its business operations.
• Dependent on Pharmaceutical and chemical sectors Capital Expenditure- The company generates a substantial portion of its consolidated revenue from customers in the pharmaceutical and chemical sectors. Consequently, its performance is closely tied to the short- and long-term trends in these industries, particularly the capital expenditure investment cycles.A significant downturn in these sectors could lead to reduced demand for the company’s products. Additionally, a slowdown in the growth of the pharmaceutical and chemical sectors in India or substantial consolidation within these industries could adversely affect product demand, impacting the company's business operations, financial performance, and overall condition.
• Negative Operating Cash Flows and Significant Working Capital Requirements- The company's operations require substantial working capital due to the significant time lag between the procurement of raw materials and components and the realization of revenue from the sale of finished products. To meet manufacturing demands, the company must maintain adequate inventories of raw materials and ensure sufficient capital is available to support operations until project-related goods and services are delivered, and costs are recovered. Additionally, the longer credit periods extended to customers, compared to the shorter payment terms from vendors and third parties, may result in cash flow mismatches. This dynamic has contributed to negative cash flows from operations, placing increased pressure on the company's working capital requirements.

Financial Snapshot:

KPI comparison with Industry Peers