Tolins Tyres files draft papers with SEBI to raise ₹230 crore via IPO

Kerala-based Tolins Tyres has filed preliminary papers to the Securities and Exchange Board of India (SEBI) to raise ₹230 crore through an initial public offering (IPO).

According to the draft prospectus filed on February 16, the IPO will comprise a combination of fresh issuance of equity shares amounting to ₹200 crore, and an offer-for-sale (OFS) of shares valued at ₹30 crore by the company's promoters.

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The promoters, Kalamparambil Varkey Tolin and his wife Jerin Tolin, will be the selling shareholders in the OFS, divesting ₹15 crore worth of shares each. Currently, the promoters hold 92.64 percent of the shares in the tyre and tread rubber manufacturer, with the remaining 7.36 percent held by public shareholders.

Before filing the red herring prospectus with the Registrar of Companies, the company is considering raising ₹25 crore through a pre-IPO placement. The firm, owned by the Tolin family, intends to allocate ₹62.55 crore from the net fresh issue proceeds to debt repayment and ₹75 crore for long-term working capital needs, with total debt standing at ₹95.09 crore as of January 2024.

Additionally, ₹24.37 crore will be invested in a wholly-owned subsidiary, Tolin Rubbers. Of this, ₹16.37 crore will go towards repaying the subsidiary's debt, and ₹8 crore for its working capital requirements. The remaining proceeds from the fresh issue will be allocated for general corporate purposes.

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Operating under the Tolins Tyres brand, the company specializes in selling tires to light commercial vehicles, agricultural vehicles, and two/three-wheeler manufacturers, primarily within India. It also exports to the Middle East, the ASEAN region, and Africa, with current exports spanning 18 countries. Export revenue accounted for 9.01 percent of its total revenue from operations in the fiscal year ended March FY23.

Tolins Tyres faces competition from listed peers such as Indag Rubber, Vamshi Rubber, TVS Srichakra, GRP, and Elgi Rubber. Notably, it achieved a standalone net profit of ₹4.99 crore in the fiscal year ended March FY23, compared to ₹0.63 crore in the previous year, alongside an increase in revenue from operations to ₹118.3 crore from ₹113.4 crore during the same period.