Time Technoplast, promoted by Anil Jain, Venkatasubramanian and associates, manufactures and sells technology-based polymer products used in industrial and consumer packaging solutions, lifestyle products, auto components, healthcare products and construction and infrastructure-related products.
Starting its operations in 1991 as an SSI unit in single-product segment (industrial packaging) with technology partner Mauser, Germany, joining in 1993, Time Technoplast has manufacturing facility located at six different places: Daman (Union Territory), Baddi-Thane (Himachal Pradesh), Hosur (Tamil Nadu), Sahibabad (Uttar Pradesh), Mahad (Maharashtra) and Pantnagar (Uttaranchal). The company is setting up new manufacturing facility in Himachal Pradesh, Silvassa (Gujarat), Sharjah (UAE), and Poland.
The forthcoming IPO is to part-finance its various aggressive expansion projects. One new project is being set up at Thane (Himachal Pradesh) to manufacture medical devices with a capacity of 4,200 tonnes per annum. These would comprise auto disabled and auto collect syringes ranging from 0.5 ml to 5 ml, and involve a capital expenditure of Rs 35.23 crore. The project is to be commissioned by October 2007.
A Rs 15.37-crore integrated injection moulding facility, with a capacity of 3,000 tonnes per annum, will come up at Silvassa for augmenting the production capacity of plastic pails and auto components. This project is likely to go on stream by October 2007.
The issue money will also be utilized in overseas projects to part-finance a new project by a wholly owned subsidiary, Elan Incorporated FZE, in Sharjah, UAE, for packaging (plastic drums, containers and coni pails) and lifestyle products (garden furniture). The total cost of the project is around Rs 27.5 crore. This is to be part-financed by a term loan of Rs 16.5 crore from the Exim Bank of India and rest through IPO proceeds. The UAE subsidiary is proposed to be operational by June 2007
Time Technoplast’s wholly owned subsidiary, Novo Tech, will put up a production facility in Poland, Europe, for auto components and lifestyle products. Commercial production will begin in October 2007. The capex required for this project is estimated to be Rs 12.1 crore.
A 75% stake has been purchased in Tainwala Polycontainers, a BSE listed company, for which it had raised a loan of Rs 40 crore. The IPO proceeds will also be used for the repayment of its outstanding portion of the loan including interest totaling to Rs 36.32 crore. The company has changed the name of the acquired company, which manufactures HM-HDPE drums/barrels and has an installed capacity of 6,000 metric tonne per annum, to TPL Pastech.
About Rs 19.2 crore raised through the IPO will be further used to acquire a 49% holding in Time Securities Services (TSSPL), which had floated the Singapore-based joint venture Mauser Holding Asia (MHA) along with Mauser Holdings. TSSPL is one of the promoters of Times Technoplast. MHA recently acquired a 91.89% stake in Pack Delta, an industrial packaging company based at Bangkok, Thailand.
Along with collaborators Mauser, Germany, Time Technoplast had formed a joint venture, Time Mauser Industries (TMIPL) in India in 2004. The Mauser group holds 51% and Time Technoplast 49% in the company set up to manufacture intermediate bulk containers (IBC) of 1000-liter capacity at Daman. TMIPL is now putting up a new 200-litre drum production facility at Pen in Maharashtra. The new project is expected to commence production from June 2007.
Time Technoplast had merged its group companies Shalimar Packaging and Oxford Moulding, catering to lifestyle products and healthcare products, respectively, from 1 April 2005. In view of this, the results of FY 2006 and nine months ended December 2006 are not comparable with the results of FY 2005, FY 2004, FY 2003 and FY 2002.
Strengths
- Operating in diverse business segments of the plastic products industry: packaging products, lifestyle products, auto components, and healthcare, effectively de-risking its business.
- Has established brands in each segment of its operation: Time Mauser for packaging products, Ecopet for PET sheets, Meadowz for Turf, DuroTurf and Durosoft for mattings, Regal for garden furniture, 3S for Anti Spray Devices (automotive component), and Genex for healthcare products.
- Has a manufacturing facility spread over six locations, eleven regional / area-marketing offices and distribution and dealer network spread over 345 cities and towns to offer its product range across the country.
- Three out of six plant locations – Daman, Thane near Baddi, and Pantnagar – enjoy income-tax exemptions, which will also be available to new plants coming up in these places.
Weaknesses
- Operating in a highly competitive environment. Also, end users are price conscious. Increasing competition implies reduction in prices, affecting margin.
- Is in the process of entering the overseas market by setting up a plant in the UAE. and Poland. No prior experience of handling overseas market.
- Fluctuations in the prices of polymers, the principal raw material, will have adverse impact on the profitability.
Valuation
Time Technoplast has set a price band of Rs. 290 to Rs 315 per equity share of Rs 10 each for the IPO. This translates into a P/E of 16.0x on the lower price band and 17.4x on the higher side of the price band, according to the annualised consolidated EPS of Rs 18.1 for the nine-month period ended December 2006 on post-issue equity of Rs. 20.92 crore. Listed plastic product majors Supreme Industries and Sintex Industries are currently traded around P/E of 17.