Tolins Tyres Files ₹230 Crore IPO Draft Papers with SEBI

Kerala based Tolins Tyres has submitted initial documents to the SEBI to initiate the process of raising ₹230 crore through an initial public offering. Draft prospectus filed on 16 February outlines that the IPO will involve a mix of fresh issuance of equity shares totaling ₹200 crore along with an OFS of shares worth ₹30 crore by the company's promoters.

IPO Details

Kalamparambil Varkey Tolin and his wife Jerin Tolin the promoters of the tyre and tread rubber manufacturing company are set to become selling shareholders in the Offer for Sale initiative. They plan to divest ₹15 crore worth of shares each. Presently the promoters maintain ownership of 92.64% of the company's shares while the remaining 7.36% is held by public shareholders. Before submitting the red herring prospectus to the Registrar of Companies the company is considering raising ₹25 crore via a preIPO placement.

The firm plans to allocate the net fresh issue proceeds strategically. A portion of ₹62.55 crores will be directed towards debt repayment with an additional ₹75 crore for long term working capital needs considering the current debt standing at ₹95.09 crores as of January 2024.

Tolins Tyres plans to invest ₹24.37 crore in its wholly owned subsidiary Tolin Rubbers. This investment will consist of ₹16.37 crore for paying off debts and ₹8 crore to support the subsidiary's day to day operations and working capital needs. The infusion of funds aims to strengthen Tolin Rubbers' operational capacity.

Tolins Tyres Business Models & Financials

Operating under the Tolins Tyres brand the company specializes in manufacturing tires for various vehicles including light commercial vehicles, agricultural vehicles and two/three-wheelers primarily serving the domestic market. It also has a presence in international markets exporting to 18 countries across the Middle East, ASEAN region and Africa with export revenue contributing 9.01% to its total revenue in FY23.

The company faces competition from listed peers such as TVS Srichakra, Vamshi Rubber, Indag Rubber,  GRP and Elgi Rubber. Despite competition the company has demonstrated commendable financial performance achieving a standalone net profit of ₹4.99 crore in FY23 compared to ₹0.63 crore in the previous year with revenue from operations increasing to ₹118.3 crore from ₹113.4 crore during the same period.

Final Words

With three manufacturing facilities including two in Kerala and one in Ras Al Khaimah, UAE Tolins Tyres currently operates at an average capacity utilisation of around 25% it aims to ramp up its production capacity utilization to 75% in the coming years reflecting its ambitious growth trajectory.