Anya Polytech & Fertilizers coming with IPO to raise Rs 44.80 crore

Anya Polytech & Fertilizers

• Anya Polytech & Fertilizers is coming out with an initial public offering (IPO) of 3,20,00,000 equity shares in a price band Rs 13-14 per equity share.
• The issue will open on December 26, 2024 and will close on December 30, 2024.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 2 and is priced 6.50 times of its face value on the lower side and 7.00 times on the higher side.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Kavita Rani.

Profile of the company

Anya Polytech & Fertilizers is engaged in the business of manufacturing of high-quality HDPE & PP bags (made from HDPE granules) and Zinc sulphate Fertilizers in primarily two categories; i.e., (i) Mono Hydrate and (ii) Hepta Hydrate. It is also engaged in the manufacturing of Micronutrient Mixture. Apart from manufacturing, it is also engaged in the trading of Single Super Phosphate (SSP), Organic Potash, Zinc EDTA (Ethylene Diamine Tetraacetate Acid), PROM (Phosphate rich organic manure), Ferus Sulphate, Magnesium Sulphate, Micronutrient Mixture, Copper Sulphate Certified Seeds and Cattle feed.

The company is also engaged in the business of Single Super Phosphate (SSP) Fertilizers through its subsidiary Arawali Phosphate Limited. Further, from the Net Proceeds, Company is proposing to set up 1 x 2 TPH Biofuel Pellet Plant under subsidiary i.e. Yara Green Energy Private Limited. The company is ISO 9001: 2015 certified for quality management system by Bureau of International Quality Standard Pte. Ltd. The quality certification is towards Manufacturing of HDPE & PP Woven Sacks, Fabric and Industrial Packaging and Manufacturer of Zinc Sulphate, Micronutrient mixture, ferrous Sulphate etc. 

Proceed is being used for:

• Meeting capital expenditure & working capital requirement in Anya Polytech & Fertilizers Limited
• Setting-up new project (Proposed Project) in Yara Green Energy Private Limited, subsidiary company, along with working capital requirement.
• Meeting working capital & capital expenditure in Arawali Phosphate Limited, subsidiary Company
• General corporate purposes

Industry Overview

Fertilizer is the most important input in agriculture. Agriculture is one of the core sectors of Indian economy and it contributes about 18 per cent to Gross Domestic Product (GDP). The fertilizer industry plays a significant role in enhancing agricultural output, addressing food security issues, and driving rural employment. India, being an agrarian country with numerous small and marginal farmers, often faces challenges related to low productivity and quality. Nitrogen, Phosphorus and Potassium (NPK) are three basic plant nutrients essential for the growth of plants. The most commonly used fertilizers by farmers are urea, which leads to incorrect balance of the ideal fertilizer use ratio. Fertilizer has played and will continue to play significant role in enhancing agricultural production. The testimony of the fact is that use of fertilizer in 1951-52 was hardly 65,000 metric tonnes (MT) in terms of nitrogen, phosphorus, and potassium (NPK) nutrients which has increased to 29.8 million MT in 2022-23. The corresponding gain in food grain production has been from 52 million MT to 329.7 million MT. 

The Indian fertilizer industry is on robust growth path. India's position as the world's second-largest producer of fruits and vegetables, next only to China, underpins the fertilizer industry's growth. Fertilizer production in FY24 was recorded at 45.2 million tonnes, reflecting the Ministry of Fertilizers' successful policies. The growth in production was driven by increased agricultural demands and strategic governmental interventions. Government initiatives like direct income support schemes from both central and state governments have also bolstered farmer liquidity, enhancing their ability to invest in fertilizers. Programs such as PM-KISAN and PM-Garib Kalyan Yojana have received endorsements from the United Nations Development Programme for their contributions to food security. The geopolitical landscape has further influenced India's fertilizer market. The government has emphasized producing nano liquid urea domestically, aiming to stabilize fertilizer prices.

The Indian fertilizer industry is on a robust growth trajectory, and is likely to continue growth momentum with self- sufficient level in urea by reducing dependency on imports of fertilizers. Fertilizer industry is likely to surpass a market size of around Rs 1 lakh crore by 2032. This growth underscores the industry’s vital role in supporting India's agricultural productivity and food security. There are also expectations of rise in demand of the fertilizer in coming years. In line with favorable weather conditions and normal monsoon in the country, the area under crops may increase and in turn will boost the sowing of the food gains, which will require the fertilizer to improve the crop neutrinos. The expansion of irrigation leads to an increase in the cropping intensity, hence more use of fertilizers. In order to fulfil the increasing demand of fertilizer, there is a need to produce fertilizer both in qualitative and quantitative means. Thus, there are opportunities for the industry to grow in the coming time.  

Pros and strengths

Wide range of product: The company boasts a diverse range of products that cater to different industry customer base. With a primary focus on customer satisfaction, it prioritizes understanding the unique requirements of its clients. Once it comprehends their specifications, it meticulously processes their requests. Its product portfolio encompasses a wide variety, including HDPE Bag, PP Bag, Flexible Intermediate Bulk Containers (FIBC), BOPP bags, woven sacks, PP fabric etc. This extensive array allows it to meet the diverse needs of its clientele.

Quality product: The company is an ISO 9001: 2015 certified Company, showcasing its unwavering commitment to maintaining high quality standards for its products. The company produce top-notch products through rigorous testing processes. Utilizing the latest technology machinery, it ensures the quality, strength, and durability of its offerings, adhering to the highest industry standards for customer satisfaction.

Focus on customer need: The company’s competitive strength is anchored in its steadfast commitment to understanding and addressing customer needs. By prioritizing a customer-centric approach, it tailors its products and services to exceed expectations. This focus not only fosters lasting client relationships but also positions it as a preferred choice in the market. Its ability to consistently meet and anticipate customer requirements sets it apart, making it a trusted partner in delivering exceptional value and satisfaction.

Risks and concerns  

Maximum revenue comes from top 2 customers: The company significantly depend its two customers i.e. Krishak Bharati Co- Operative and Kribhco Fertilizers for major portion of its sales. The company has derived 69.44%, 70.35%, 77.63% and 74.50% of its revenue from operation from top two customer during the period ended on June 30, 2024 and fiscal year ending on March 31, 2024, 2023 and 2022 respectively. If such customers choose not to source their requirement from the company, its business, financial condition and result of operation may be adversely affected.

Geographical constrain: The company’s revenues are highly dependent on its operations in geographical region of state of Uttar Pradesh. The company has garnered 58.64%, 61.83%, 46.80% and 68.91% of its revenue from operation from Uttar Pradesh during the period ended on June 30, 2024 and fiscal year ending on March 31, 2024, 2023 and 2022 respectively. Depending heavily on revenue from a single state exposes the company to several risks, primarily associated with geographical concentration. Any economic instability within the state could directly and immediately impact its business adversely. Furthermore, there might be constraints on market expansion, influenced by the state's size and population, potentially resulting in heightened local competition as businesses strive to retain market share and pricing control, thereby putting pressure on profit margins.

No long-term agreements with suppliers for its raw materials: The company’s business depends on the availability of reasonably priced, high quality raw materials in the quantities required by it and it depends on a few suppliers for procurement of raw materials, required for manufacturing its products. Top ten suppliers of the company for period ended on June 30, 2024, year ended on March 31, 2024, March 31, 2023 and March 31, 2022 contributed for 74.51%, 65.18%, 65.69% and 79.26%, respectively of its purchases. The company does not have established long-term contracts with its suppliers, and raw material prices are determined through quotes from various sources. The absence of formal agreements means suppliers are not contractually obligated to prioritize its supply needs, leaving them free to sell to its competitors. The unavailability or insufficient quantity of raw materials, or the use of substandard quality, could significantly and negatively impact its business.

Outlook

Anya Polytech & Fertilizers is engaged in the business of Fertilizers and bags manufacturing and also provides environmental solutions. The company manufactures high-quality High Density Polyethylene (HDPE) & Polypropylene (PP) bags and Zinc sulphate Fertilizers. The company has wide range of product and has a good marketing team. On the concern side, the company derives its maximum revenue from operation from top two customers. If such customers choose not to source their requirement from the company, its business, financial condition and result of operation may be adversely affected. Moreover, the company does not have long-term agreements with suppliers for its raw materials and an increase in the cost of, or a shortfall in the availability or quality of such raw materials could have an adverse effect on its business and results of operations.

The company is coming out with a maiden IPO of 3,20,00,000 equity shares of Rs 2 each. The issue has been offered in a price band of Rs 13-14 per equity share. The aggregate size of the offer is around Rs 41.60 crore to Rs 44.80 crore based on lower and upper price band respectively. On performance front, net revenue from operations for the period ended March 31, 2024 stood at Rs 12,341.77 lakh, whereas in Financial Year 2022-23 it stood at Rs 11,555.26 lakh representing an increase of 6.81%. The increase in revenue from operation is primarily attributable due to increase in sale of HDPE/PP bags and commencing the sale of fertilizer through outlets. Moreover, the company’s profit after tax increased significantly by Rs 427.38 lakh from Rs 570.33 lakh in year ended March 31, 2023 to Rs 997.71 lakh for the year ended March 31, 2024.

The company constantly diversifies its product range by introducing new items that meet market demands, are essential, or align with current trends. It also considers products manufactured by competitors or recommended by its research and development team. A recent addition to its portfolio is the production of printed laminates for flexible packaging, broadening its product offerings. Moving forward, the company remains committed to exploring viable business opportunities to further enhance its product line and overall market presence.