Tarsons Products
Profile of the company
Tarsons Products is an Indian labware company engaged in the designing, development, manufacturing and marketing of ‘consumables’, ‘reusables’ and ‘others’ including benchtop equipment, used in various laboratories across research organizations, academia institutes, pharmaceutical companies, Contract Research Organizations (CROs), Diagnostic companies and hospitals. It manufactures a range of quality labware products which helps advance scientific discovery and improve healthcare. The company’s product portfolio is classified into three key categories which include consumables, reusables, and others. ‘Consumables’ category includes products such as centrifuge ware, cryogenic ware, liquid handling, PCR consumables and petri dish, transfer pipettes and others. ‘Reusables’ category includes products such as bottles, carboys, beakers, measuring cylinders and tube racks. ‘Others’ category includes benchtop instrumentation such as vortex shakers, centrifuges pipettors and others.
The company caters to a diverse range of end customers across various sectors which include research organizations, academic institutions, pharmaceutical companies, CROs, diagnostic companies, and hospitals. Some of its end customers include customers such as Indian Institute of Chemical Technology, National Centre for Biological Sciences across academic institutes and research organizations; Dr Reddy's Laboratories, Enzene Biosciences across pharmaceutical sectors; Syngene International, Veeda Clinical Research across CROs; and Molbio Diagnostics, Agappe Diagnostic, Metropolis Healthcare, Dr. Lal Path Labs, Mylab Life Solutions across other sectors such as diagnostics. It distributes its products to these end customers on a pan-India basis through its authorised distributors. It has long-standing relationships with its end customers as well as distributors, which it has achieved by aligning its offerings with their business needs and through the support of an on-ground sales and marketing team.
Proceed is being used for:
Industry overview
The Indian healthcare market has witnessed a growth of 9.1% in 2020 to reach $198 billion. The Indian healthcare market is expected to register a huge growth of 23% between 2020-2025 to reach $557 billion by 2025. The growing prevalence of chronic diseases due to an increasing aged population in India and globally, coupled with government initiatives for manufacturing under ‘Make in India’ and the global need for lower cost therapies at high quality has led to health investments from healthcare players, fostering development of the healthcare industry. The growth in incidence of chronic diseases and diseases due to the sedentary lifestyle of majority of the population, rise in demand for affordable healthcare delivery systems, increase in healthcare associated costs, technological advancements, and emergence of telemedicine, the rapid penetration of health insurance and advancements in government initiatives like e-health together with the tax benefits and incentives are driving the growth of the healthcare market in India.
The Indian biotech industry is approximately 2% of the global biotech industry. The industry is comprised of about 800 companies with a current market size of Rs 360-500 billion depending on the source. India is a leading destination for clinical trials, contract research, and manufacturing activities owing to the growth in the bio-services sector. India’s healthcare expenditure as a % of GDP is almost 1/3rd of the global average. However, the government is taking efforts to improve this. One major factor that will lead to the growth is health insurance which public and private companies are promoting. The Indian pharmaceutical industry is the 3rd largest in the world by volume. However, despite this achievement, India is significantly dependent on the import of basic raw materials, viz., Bulk Drugs that are used to produce medicines. In some specific bulk drugs the import dependence is 80 to 100%. The government plans to put in place a production-linked incentive (PLI) scheme to boost domestic manufacturing of critical key starting materials (KSMs) or drug intermediates, used to make bulk drugs, as well as APIs. The PLI could cost $911.5 million over the next eight years.
Pros and strengths
Leading Indian supplier to life sciences sector with strong brand recognition and quality products: It is an Indian labware company engaged in the designing, development, manufacturing and marketing of consumables, reusables and bench-top equipment. Its end customers associate the brand ‘Tarsons’ with quality labware and benchtop equipment that incorporates quality, reliability and value. For instance, its range of bottles and carboys are manufactured with specially designed sealing mechanism, making it one of the most trusted partners to the diagnostic industry which rely on its products to store and transport their critical reagents. It has emphasized on building quality management systems and production processes to ensure its products meet the highest quality standards. For instance, its ‘MAXIPENSETM’ range of liquid handling products exhibit exceptional performance in terms of release consistency and low adhesion which helps in ensuring better accuracy and optimal usage of reagents. Its engineering team has invested considerable time to find the adequate resin formulation which has led to exceptional liquid handling performance across its liquid handling products.
Provides diverse range of labware products across varied customer segments: The company is among the top three labware manufacturing companies in India, providing an extensive range of laboratory consumables, reusables and ‘others’ product categories. The company was founded on the ideology of serving the needs of the Indian scientists’ community and with its expertise in precision manufacturing technologies, it has developed a diverse range of labware products such as pipette tips, petri dish, centrifuge tubes, cryo vials, transfer pipettes, bottles, carboys, measuring cylinder, desiccators, minicoolers, cryobox and test tube racks. Since the company’s inception, it has expanded its range of labware offerings and achieved economies of scale in its manufacturing operations alongside its product portfolio which has enabled it to service new markets and explore new product offerings to its customers.
Well-equipped and automated manufacturing facilities: The company’s manufacturing capabilities are vertically integrated with design and development being carried out in-house. All its manufacturing facilities have injection moulding and extrusion blow moulding machines which are well complemented with advanced automation technologies. Its manufacturing processes are automated with use of robotics and certain other technologies that has developed in collaboration with its overseas partners. Its automation lines help improve product cost efficiencies and output. It has also developed automation for the handling and packaging of its product line of petri dish. Its automation process is primarily designed to ensure that the complete production process is free from human touch which in turn helps to achieve the desired purity levels required for use in life sciences products.
Wide reach through its pan India sales and distribution network: The company has a pan India sales and distribution network that enables it to cater to a wide range of end customers, thereby ensuring effective penetration of its diverse range of products. As a result of its pan India distribution network and its ability to distribute products on a pan-India basis, it has been able to develop a comprehensive customer base that differentiates the company from its competitors. The company’s distribution network across India comprises over 141 authorized distributors as at June 30, 2021. Its extensive and dedicated distribution network enables it to serve its customers in an efficient and timely manner. The company has a loyal distribution network as most of its key distribution partners have been associated with it for more than the last two decades. Additionally, the company has a presence in the overseas market as well making it one of the few Indian players to have a global reach in the labware market.
Risks and concerns
Geographical concentration of all manufacturing facilities: Due to the geographic concentration of the company’s manufacturing units in West Bengal, its operations are susceptible to local and regional factors, such as accidents, system failures, civil unrest as well as other adverse social, economic and political events in India, weather conditions, natural disasters, regional conflicts and demographic and population changes, and other unforeseen events and circumstances. For instance, the company faced delays in supply of products to its distributors due to unavailability of transporters in the months of April 2020 and May 2020 due to COVID-19. Further, operations of the company’s manufacturing facilities were impacted due to super cyclone Amphan in the month of May 2020, however, the financial impact of the super cyclone Amphan on the company was negligible. Any damage or destruction of or interruption of activities or capacity constraints in its manufacturing units will result in a temporary disruption of its manufacturing abilities for its product segments resulting in delays in shipments of such goods to its distributors/end customers.
Dependent on distribution network: The company’s sales and marketing team works closely with the distributors and sub-distributors to understand consumer preferences, and to receive feedback on its products and that of its competition, which enables it to formulate an effective strategy for sales, marketing and pricing. It typically supplies its products directly to its authorized distributors who in turn sell its products to end customers across India and none of its distributors are exclusive to the company. Further, the agreements which the company has entered with the distributors state the terms of payment and sale and distribution of the company’s products. There are no binding agreements with any of the company’s distributors on annual basis or for advance purchases. The company’s competitors may adopt innovative distribution models such as sales through online platforms, which could be more effective than traditional distribution models resulting in a reduction in the sales of its products. It may also face disruptions in the delivery of its products for various reasons beyond its control, including poor handling by distributors of its products, transportation bottlenecks, natural disasters and labour issues, which could lead to delayed or lost deliveries.
No purchase arrangements with raw material suppliers: The company identifies and approve multiple third-party suppliers, from whom it procures raw materials, packaging material and services, including in relation to radiation and disinfection of its products. It primarily rely on medical grade polymers such as PP, PS, HDPE, LDPE and other materials. The company imports over 75% of its raw materials and purchases specialized grades of plastic resins from global suppliers located across countries. As of June 30, 2021, top 5 regions/countries from which the company imports raw material are Europe, Singapore, USA, Malaysia and Taiwan accounting for 44.49%, 16.73%, 14.22%, 10.63%, and 7.60% of the total raw materials imported, respectively. Further, its purchase of raw materials from its top ten suppliers accounted for 76.79% of its total purchases of raw material as of June 30, 2021. The company does not have any binding advance purchase arrangements with its raw material suppliers. Any delay, interruption, or reduction in the supply of raw materials to manufacture its products may adversely affect the company’s business, results of operations, cash flows and financial condition.
Face competition: The labware industry presents significant entry barriers, including customer validation and approvals, expectation from customers for process innovation and requirement of adherence to high quality standards and stringent specifications. Indian labware market comprises of both domestic companies and MNCs. The company’s manufacturing facilities are well equipped with precise and reliable automation which has enabled it to develop a strong brand recognition and consumer loyalty in the domestic market. The company’s primary competition comprises of MNCs including Corning Life Sciences and Thermo Fisher Scientific in domestic as well as overseas market. The company compete on the basis of product availability, pricing, relationships with end customers, product quality, and process innovation and there can be no assurance that it will be able to successfully expand range of its product portfolio in a timely manner or at all.
Outlook
Tarsons Products is an Indian labware company engaged in the designing, development, manufacturing and marketing of consumables, reusables and bench-top equipment. The company possesses the expertise in plastic moulding and has a sound knowledge of latest and inventive laboratory techniques, thus each of the products are customized to laboratory needs. It caters to a diverse range of end customers across various sectors which include research organizations, academic institutions, pharmaceutical companies, CROs, diagnostic companies, and hospitals. It has developed customized products to suit specific requirements of its customers. It supply its products to over 40 countries across both developed and emerging markets through a blend of branded and ODM sales. It currently operates through its five manufacturing facilities located in West Bengal. On the concern side, the company faced supply chain disruptions which impacted its sales for a brief period in the June 2020 quarter, due to the movement restrictions in India and globally to curb the spread of the COVID-19 pandemic. As a result, there was a decrease in its production and sales during this period. Besides, the company has five manufacturing facilities which are subject to certain operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of efficiency, obsolescence of equipment or machinery, labour disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government and regulatory authorities.
The issue has been offered in a price band of Rs 635-662 per equity share. The aggregate size of the offer is around Rs 984.38 crore to Rs 1026.24 crore based on lower and upper price band, respectively. On the performance front, the company’s total income increased by 30.12% to Rs 234.29 crore for Fiscal 2021 from Rs 180.05 crore for Fiscal 2020. The company’s net profit after tax for Fiscal 2021 increased by 69.92% to Rs 68.87 crore from a profit of Rs 40.53 crore for Fiscal 2020 on account of sale of higher value-added products and control of operating expenses and interest expenses. The company intends to continue enhancing its brand awareness and customer loyalty through promotional and marketing efforts. It will continue to conduct individual customer roadshows which will help to maintain and strengthen brand recall across its customer base. The company seeks to leverage its extensive experience to strengthen its industry position by developing new products to capitalise on emerging trends. It also proposes to launch new products in the labware market with varied applications across industries and continue to improve process and cost efficiencies in its operations. It also aims to achieve this by leveraging its existing technical and manufacturing capabilities.
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