Gabriel Pet Straps
- Gabriel Pet Straps is coming out with an initial public offering (IPO) of 7,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 101 per equity share.
- The issue will open for subscription on January 31, 2024 and will close on February 2, 2024.
- The shares will be listed on BSE SME Platform.
- The share is priced at 10.10 times higher to its face value of Rs 10.
- Book running lead manager to the issue is Shreni Shares.
- Compliance Officer for the issue is Gandecha Khyati Hareshbhai.
Profile of the company
Gabriel Pet Straps is engaged in the manufacturing and selling of Pet Straps under its brand name of “Gabriel” widely used in packaging of heavy materials. It produces Pet Strap from 9mm to 32mm width and thickness ranging from 0.70mm to 1.30mm. Its product, pet straps is manufactured in appropriate composition of virgin content raw material i.e., hot washed pet bottle flakes and non-virgin content raw material i.e. used pet straps grinding. It aspires to keep improving its products, backed with innovative new technologies to provide a great experience to its customers. The company’s products enable it to capitalize on growth opportunities and increasing demand of its industry.
The company offers customised bulk packaging solutions to different industries such as Cotton Bales, Fiber, Packaging, Paper, Waste Cloth etc. Over the years, the company has developed expertise and upgraded its technology by adding several automatic machineries and equipment to the plant, which has helped it to boost its production capacity and the quality of its products.
The company manufactures on extrusion lines using technology equipped with optimum quality control and testing machinery, ensuring the standard of quality. Its pet straps are in different size, colour along with the additional option of printing directly on the Straps. The company maintains a base of reliable material suppliers who consistently provide materials of appropriate dimensions as per its requirements. The raw materials procured from its suppliers are assembled and fabricated according to the manufacturing requirements of its products. After the raw materials is fabricated, the product is then processed for finished goods. Its manufacturing facilities are well equipped with the required facilities including machinery, other handling equipment’s to facilitate smooth manufacturing process and easy logistics. It endeavours to maintain safety in its premises by adhering to key safety norms, established through its internal safety protocols.
Proceed is being used for:
- Repayment or prepayment, in full or in part, of borrowings availed by the company from banks, financial institutions and non-banking financial companies.
- Acquisition of land.
- Funding of capital expenditure requirements of the company towards set up of Solar Power Plant.
- General corporate purposes.
Industry overview
Pet Straps is known for its impact resistant and thus is widely used in different industries for packaging purposes. These Pet Strap are anti-slit & do not break in between. Used with the right tools these Straps provide unmatched strength to replace steel strap. Pet strap is the commonly used thermoplastic polymer resin in the family of polyester strapping. It is primarily used for transportation of packaging materials, clothing, liquids & foods, building materials, and containers. Pet strap is formed by the method, wherein a strap or polyester sheet is put through stretching steps with a specific stretch ratio. Characteristics of Pet strap include corrosion-resistance, high shock absorption ability, recyclability, high tensile strength, tear resistance, and elasticity. In terms of long term usage, this strap is highly vigorous and UV light resistant. Pet strap is a less expensive alternative to steel strap as it has lower strength packaging requirements.
The global polyester straps market is estimated to be valued at $693.7 Mn in 2017 and is anticipated to register a CAGR of 7.2% during the forecast period to reach $1,388.6 Mn by the end of 2027. In terms of volume, the global polyester straps market is estimated at 564.3 '000 tonnes in 2017 and is expected to exhibit a CAGR of 6.6% during the forecast period, to reach 1,073.8 '000 tonnes by the end of 2027. Pet straps are largely used by the cotton industry, which accounts for a 45% share, followed by automotive, appliance, and others. India has about 30 manufacturers, with the western region being the principal supplier. The market is expected to record a high CAGR of 14% from 2015 to 2020. PET Straps has been the third largest market of recycled PET Industry in terms of revenues, while it has been the second largest market in terms of production volume.
The fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks. The Indian packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while the imports include tinplate, coating and lining compounds and others. Over the last few years Packaging Industry is an important sector driving technology and innovation growth in the country and adding value to the various manufacturing sectors including agriculture and FMCG segments. Growth in this sector is primarily driven by factors like growing pharmaceutical, food processing, manufacturing industry, FMCG, healthcare sector and ancillary in the emerging economies like China, India, Brazil, Russia and few other East European countries. Going forward, strong favorable demographics, increasing disposable income levels, rising consumer awareness and demand for processed food have been prime factors behind the surge in demand of plastic packaging.
Pros and strengths
Customer base across geographies and industries: The company has a customer base across industries and geographies. It follows B2B customer segment. In addition to direct sales, it also sells its products through dealers and distributors. The company’s customers are typically engaged in various industries, including Cotton Bales, Fiber, Packaging, Paper, Waste Cloth etc. and are spread across various geographies, which helps it to mitigate risks resulting from customer, industry and geographic concentration. The company’s presence in multiple regions in India provides it with a strategic advantage to tap into diverse markets and expand its business footprint.
Optimal Utilization of Resources: The company constantly endeavours to improve its production process, skill up gradation of workers, modernization of plant and machineries to optimize the utilization of resources. It regularly analyses its material procurement policy and manufacturing process and take corrective measures for smooth and efficient working thereby putting resources to optimal use.
Scalable business model: The company’s business model is scalable. Its business model is customer centric, and requires optimum utilization of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets both domestic and international by exploring customer needs and by maintaining the consistent quality product.
Risks and concerns
Significant revenue comes from one of its products; i.e. Pet Straps: The company derives significant portion of its revenue from one of its products, Pet Straps. The industry in which it operates is characterized by quality and reality of products, timely delivery, demands for features, and continual product innovation adapting to the changing customer preferences. These conditions may also result in significant competitions. If the end-user demand is low for its customers’ products, there may be significant changes in the orders from its customers and it may experience greater pricing pressures. Its success is therefore dependent on the success achieved by its products and the same being continued to be well acceptable in market. If its products fail to gain acceptance, it may experience reduced demand which may affect its sales to such customers, operating margins and all of these combined may adversely effect on its revenue, reputation, financial conditions, results of operations and cash flows.
Maximum revenue comes from top 10 customers: Given the nature of its business, there can be no assurance that it would be able to attract new customers or reduce its dependence on any of its top customers. The company derives a significant part of its revenue from its top 10 customers and it does not have long term contracts with these customers. Accordingly, any failure to retain these customers or to remain suppliers to these customers and/or negotiate on terms that are commercially viable, with these select customers, could adversely affect its business, financial condition and results of operations. In addition, any defaults or delays in payments by a major customer or the insolvency or financial distress by a major customer may have an adverse effect on business, financial condition and results of operations.
Higher debt-equity ratio: The company has higher debt-equity ratio which requires significant cash flows to service its debts obligations, and this, together with the conditions and restrictions imposed by its financing arrangements, fluctuations in the interest rates may limit its ability to operate freely and grow its business. The company is having a debt-equity ratio of 3.10 times, 1.90 times, 1.19 times and 1.49 times on October 15, 2023, August 02, 2023, March 31, 2023 and March 31, 2022, respectively. If its future cash flows from operations and other capital resources become insufficient to pay its debt obligations or its contractual obligations, or to fund its other liquidity needs, it may be forced to sell assets or attempt to restructure or refinance its existing indebtedness. Its ability to restructure or refinance its debt will depend on the condition of the capital markets, its financial condition at such time and the terms of its other outstanding debt instruments.
Outlook
Gabriel Pet Straps was founded in 2020 and manufactures and sells Pet Straps under the brand name Gabriel for the packaging of heavy materials. The company offers tailor-made packaging solutions in various sizes and colors, as well as the additional option of printing directly on the strapping, for various industries such as cotton bales, fibres, packaging, paper, waste cloth, etc. The manufacturing facility of Gabriel Pet Straps is located in Rajkot, Gujarat. The company manufactures pet straps in widths ranging from 9 mm to 32 mm and thicknesses from 0.70 mm to 1.30 mm. On the concern side, the company’s business is dependent and will continue to depend on its manufacturing facility, and it is subject to certain risks in its manufacturing process. Any slowdown or shutdown in its manufacturing operations or strikes, work stoppages or increased wage demands by its employees that could interfere with its operations could have an adverse effect on its business, financial condition and results of operations. Moreover, the company derives significant portion of its revenue from one of its products; i.e. Pet Straps. Its profitability, business and commercial success is significantly dependent on its ability to successfully anticipate the industry and customer requirements and utilize its resources to enhance and develop its products that efficiently satisfy and meet its client’s specific requirements in a timely manner. Any failure on its part to do so, may have an impact on the reputation of its products, which could have an adverse effect on its revenue, reputation, financial conditions, results of operations and cash flows.
The company is coming out with an IPO of 7,98,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 101 per equity share to mobilize Rs 8.06 crore. On performance front, the company’s total revenue increased by 54.93% from Rs 968.57 lakh for the financial year March 31, 2022 to Rs 1500.60 lakh for the financial year ended March 31, 2023. Moreover, Profit after Tax increased by Rs 55.63 lakh to Rs 51.96 lakh in FY 2023 from a net loss of Rs 3.68 Lakhs in FY 2022. Going forward, the company having major presence in the states of Gujarat, Maharashtra, Madhya Pradesh, Rajasthan and Telangana. Its growth in other states in the country can fetch it new business expansion and opportunities. Moreover, the company intends to establish its presence in few other locations in the country. Its emphasis is on scaling of its operations in other markets shall provide it with attractive opportunities to grow its client base and revenues. Apart from expanding business and revenues, the company has to look for areas to reduce costs and achieve efficiencies in order to remain a cost competitive company. Its manufacturing process running 24 hours which leads to consumption of electricity is very high. It intends to install solar power plant to further decrease its power and fuel cost and dependence on state electric supply.
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