What You Must Know About Solve Plastic Products IPO: Price Band ₹91 Per Share

About Solve Plastic Products Limited

Established in 1994, Solve Plastic Products Limited produces various PVC electrical conduits and uPVC pipes (unplasticised polyvinyl chloride) and sells them under the "BALCOPIPES" brand.

The company operates one well-equipped Tamil Nadu production facility and three Kerala manufacturing facilities. Several agencies, including the Bureau of Indian Standards (BIS), Central Public Works Departments (CPWD) in Chennai and Kochi, Military Engineer Services (MES), Integral Coach Factory, Public Works Departments (PWD) in Kerala and Tamil Nadu, and the Tamil Nadu Housing Board, have approved the manufactured goods. The company primarily distributes its goods across Kerala.
 

The Objective of the Issue

The following goals are the intended uses of the issue proceeds for Solve Plastic Products IPO:

• Funding of Capital Expenditure: A significant portion of the funds will be used for capital expenses, such as installing new Plants and machinery. This is aimed at expanding production capacity and enhancing operational efficiency.
• Repayment/Pre-payment of Borrowings: Another portion of the proceeds will be utilised to repay or pre-pay, either in whole or in part, certain borrowings that the company has availed. This is intended to reduce the financial burden and improve the company's leverage.
• General Corporate Purpose: The remaining funds will be directed towards general corporate purposes, including working capital requirements, administrative expenses, or other operational needs contributing to the company's overall growth and stability.

Highlights of Solve Plastic Products IPO

Solve Plastic Products IPO is set to launch with a fixed price issue of ₹11.85 crores. The issue comprises a fresh issue of 13.02 lakh shares with no offer-for-sale component. Here are the key details of the IPO:

• The IPO opens for subscription on August 13, 2024, and closes on August 16, 2024.
• The allotment is expected to be finalised on Monday, August 19, 2024.
• Refunds will be initiated on Tuesday, August 20, 2024.
• Credit shares to Demat accounts are also expected on Tuesday, August 20, 2024.
• The company will tentatively list on BSE SME on Wednesday, August 21, 2024.
• The price is fixed at ₹91 per share.
• The lowest lot size for the IPO application is 1200 shares.
• Retail investors need to invest minimum of ₹109,200.
• The minimum investment for High-Net-Worth Individuals (HNIs) is 2 lots (2,400 shares), amounting to ₹218,400.
• Finshore Management Services Limited Ltd is the book-running lead manager for the IPO.
• Integrated Registry Management Services Private Limited serves as the registrar.
• Black Fox Financial is the market maker for the issue.

Solve Plastic Products IPO - Key Dates

The overall timeline for the Solve Plastic Products IPO is as follows:

Solve Plastic Products IPO Issue Details/Capital History

To acquire capital, Solve Plastic Products Limited's Initial Public Offering (IPO) plans to issue 1,302,000 equity shares at a price of ₹91 per share, with a fixed-price plan. Each share has a face value of ₹10. Investors can apply for a minimum of around 1200 shares. The pre-issue shareholding of the corporation is 3,066,250 shares; the post-issue shareholding will rise to 4,368,250 shares. The shares will be directly listed on the NSE SME platform. The IPO opens on August 13, 2024, and closes on August 16, 2024.
 

Solve Plastic Products Limited Allocation & Minimum Investment Lot Size

The IPO shares of the company are distributed as follows:

Investors can place bids for multiples of the minimum of 1200 shares. The minimum and highest shares and amounts that retail investors and HNIs have invested are shown in the table below.

SWOT Analysis: Solve Plastic Products Limited

Strengths

• Established Industry Experience: Solve Plastic Products Limited has been operational since 1995, offering a solid foundation in plastic product manufacturing with a significant market presence.
• Diverse Product Range: The company specialises in various plastic products, catering to multiple industries, which enhances its market reach and customer base.
• Strategic Location: The manufacturing facility provides logistical advantages, allowing easy access to raw materials and critical markets.
• Financial Stability: The company's consistent profitability and robust financial performance over recent years highlight its financial strength.

Weaknesses

• Geographic Limitation: The company’s operations are concentrated mainly in Kerala, limiting its ability to serve a wider geographical area.
• Dependence on Specific Raw Materials: The company's dependence on plastic granules makes it vulnerable to fluctuations in raw material prices.
• Workforce Constraints: The company operates with a relatively small workforce, which might hinder rapid expansion or scaling of operations.
• Debt Dependency: A significant portion of the company’s capital is sourced from debt, which could pose risks if interest rates rise or financial conditions tighten.

Opportunities

• Growing Market Demand: Increasing demand for plastic products across various sectors presents significant growth opportunities.
• Export Potential: The company can explore international markets to diversify revenue streams and reduce overall dependency on domestic markets.
• Innovation and Product Development: Investing in new technologies and innovative products could enhance the company’s competitiveness and profitability.
• Government Support: Favorable government policies and initiatives in manufacturing and infrastructure development could further boost the company's growth prospects.

Threats

• Market Volatility: Fluctuations in raw material costs and market demand could impact profitability.
• Regulatory Challenges: Stricter environmental regulations and compliance requirements could increase operational costs.
• Intense Competition: The plastic manufacturing industry is highly competitive, with organised and unorganised players putting pressure on margins.
• Economic Uncertainty: Any economic downturn could adversely affect demand for plastic products, impacting the company's revenue.
   

Financial Highlights: Solve Plastic Products Ltd

Solve Plastic Products Limited has shown a mixed financial performance over the past three fiscal years. The company's revenue, however, has experienced some fluctuations, with a drop from ₹6,225.43 lakhs in FY23 to ₹4,715.73 lakhs in FY24, after an increase from ₹5,577.89 lakhs in FY22. Despite the revenue decline, the Profit After Tax (PAT) has improved consistently, rising from a loss of ₹40.71 lakhs in FY22 to a profit of ₹142.48 lakhs in FY24, showcasing the company's ability to turn around its profitability.

The company's total assets have grown steadily from ₹1,822.99 lakhs in FY22 to ₹2,211.53 lakhs in FY24, reflecting ongoing investments in infrastructure and capacity. Additionally, Solve Plastic Products Limited's net worth has increased substantially, rising from ₹7,229,000.00 lakhs in FY22 to ₹438.79 lakhs in FY24, indicating a strengthening of the company's financial foundation.

However, although improving, the company's reserves and surplus remain in negative territory, moving from ₹-231.21 lakhs in FY22 to ₹132.16 lakhs in FY24. Total borrowings have also increased slightly from ₹1,030.43 lakhs in FY22 to ₹1,136.42 lakhs in FY24, suggesting the company has taken on additional debt to support its growth efforts.