Tolins Tyres Limited IPO: Check IPO Date, Lot Size, Price & Details

About the Company:

Tolins Tyres Ltd operates in two verticals: the production of new tyres and tread rubber. Its primary focus is on manufacturing bias tyres for various vehicles, including light commercial vehicles, agricultural machinery, and two- and three-wheelers, as well as precured tread rubber. In FY2024, the Tyres vertical, which encompasses all types of tyres, tubes, and flaps, accounted for 24.26% of revenue from operations, and the Tread rubber vertical, which includes precured tread rubber, conventional tread rubber, bonding gum, vulcanizing solutions, and other ancillary products like rope rubber, contributed 75.74% of the revenue.

The company operates three manufacturing facilities: two situated in Mattoor, Kalady, Kerala, and the third in the Al Hamra Industrial Zone in Ras Al Khaimah, UAE. It has a combined production capacity of 1.51 million per annum tyre capacity, 12,486 tons per annum of tread rubber capacity and 17,160 tons per annum of rubber compounds. It serves all three market segments: exports, domestic sales, and Original Equipment Manufacturers (OEMs) such as Marangoni GRP, Kerala Agro Machinery Corporation Ltd (KAMCO), Redlands Motors, and Tyre Grip. It exports to 40 foreign countries, including the Middle East, East Africa, Jordan, Kenya and Egypt. As of March 31, 2024, the company operates 8 depots and has 3,737 dealers throughout the country. In the tyres category, the company holds a market share of 0.06% in India and 0.00% globally. In the retread tyres category, it has a market share of 2.73% in India and 0.18% globally.

IPO Details:

Objects of the Offer:

The Net Proceeds (Gross Fresh Issue proceeds less Offer related expenses in relation to Fresh Issue) are proposed to be utilized as follows:

Key Strengths and Opportunities:

• Diversified Product Range and Customised Product Offering: The company offers a total of 163 stock keeping units (SKUs) in the tyre category and 1,003 SKUs in tread rubber. Adopting a customer-centric business model, the company strives to provide customized products that meet specific customer needs. This approach has enabled the company to broaden its business operations and expand its customer base.
• High Quality Products: It rectifies quality defects or product errors on real time basis. Its product recalls/ claims were as low as 0.20%, 0.19% and 1.00% of the total sales during the Fiscals 2024, 2023 and 2022, respectively. It holds quality certificates issued by various authorities. The in-house laboratory for testing and quality improving gives its products competitive advantage in fuel efficiency, water evasion, skid resistance and versatility.
• Integrated manufacturing operations: The company is backward integrated, encompassing raw materials, design, process engineering, machining capabilities, and mold production. This integration provides the company with enhanced control over processes, delivery timelines, pricing, and quality. By reducing reliance on third parties, the company streamlines its production processes and enhances operational efficiencies.
• Experienced Management Team: The Chairman and Managing Director, Dr. Kalamparambil Varkey Tolin, has over three decades of techno-commercial management experience in the rubber and tyre industry. His leadership excellence has been a key driver of the company's financial growth.

Risk factors:

• Raw Material Supply and Pricing Risk: The tyre manufacturing industry struggles with a limited supply of key raw materials such as natural rubber and carbon black. The company lacks long-term supplier contracts. This reliance, coupled with price volatility and potential supply delays, poses risks to its business outcomes. It also faces Suppliers Concentration as top 5 Suppliers accounted for 77.92% of Total Purchases in FY2024.

• Dependence on the Automotive Sector: The company’s business is reliant on auto sector’s performance. The growth of the Indian automotive sector is dependent on numerous factors, including macroeconomic trends, higher penetration in semi-urban and rural markets, finance penetration, urban demand sentiments etc.

• Dependence on Dealers and Distributors: The company has generated over 70% of revenue in FY2024 through the channel of dealers and distributors. However, the company does not have formal contracts with these partners. Any issues in maintaining relationships with existing dealers or finding suitable replacements could negatively impact product sales.

• Under-utilization of Manufacturing Facilities: In FY 2024, the company's capacity utilization rates were 31.68% for Tyres, 47.82% for PCTR, 24.00% for Bonding Gum, and 42.04% for Flaps. Without new production orders, the company may face operational inefficiencies and financial losses due to idle capacity and high fixed production costs.

• Competitive Market Pressures: The company operates in a highly competitive industry and encounters competition from both domestic and international firms. Failure to compete effectively against these rivals could lead to a loss of customers and market share. Such challenges could adversely impact the company's business performance.

Financial Snapshot:

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