Apply For Indigo Paints IPO At Arihant Capital
Indigo Paints Limited
Indigo Paints Ltd is the fifth-largest company in the Indian decorative paint industry in terms of revenue from operations for Fiscal 2020 and also the fastest growing amongst the top five paint companies in India. The company has achieved this position in a highly competitive Indian decorative paint industry on the back of our multi-pronged approach. This includes introducing differentiated products to create a distinct market in the paint industry, building brand equity for our primary consumer brand of “Indigo”, creating an extensive distribution network across 27 states and seven union territories. The company manufactures a complete range of decorative paints including emulsions, enamels, wood coatings, distempers, primers, putties, and cement paints. To create demand for Company’s differentiated products, Indigo paints initially tapped into Tier 3, Tier 4 Cities, and Rural Areas, where brand penetration is easier and dealers have greater ability to influence customer purchase decisions.
Company subsequently leveraged this network to engage with dealers in Tier 1 and Tier 2 Cities and Metros. Indigo Paints started its operations in 2000 and has been present across segments such as interior and exterior emulsions, enamels, wood coatings, putty, primers, and ceiling and floor coats.
It is the first company that started manufacturing certain differentiated products like Metallic Emulsions, Bright Ceiling Coat Emulsions, Tile Coat Emulsions, Dirtproof & Waterproof Exterior Laminate, Floor Coat Emulsions, Exterior and Interior Acrylic Laminate, and PU Super Gloss Enamel. The sales from these differentiated products are continuously growing as it was 26.68% in 2018 increased to 28.62% in fiscal 2020.
Company’s Manufacturing Facilities:
The company owns and operates three manufacturing facilities located in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu) with an aggregate estimated installed production capacity of 101,903-kiloliters per annum (“KLPA”) for liquid paints and 93,118 metric tonnes per annum (“MTPA”) for putties and powder paints.
We also intend to expand our manufacturing capacities at our facility at Pudukkottai in Tamil Nadu, by adding capacities to manufacture water-based paints to cater to the growing demand for these paints.
The proposed installed production capacity of the expansion unit is 50,000 KLPA and it is expected to be operational during Fiscal 2023.
Company Strengths
- Track record of consistent growth in a fast-growing industry with significant entry barriers;
- Differentiated products leading to greater brand recognition and enabling expansion into a complete range of decorative paint products;
- Focused brand-building initiatives to gradually build brand equity;
- The extensive distribution network for better brand penetration;
- Leveraged brand equity and distribution network to populate tinting machines;
- Strategically located manufacturing facilities with proximity to raw materials; and
- Well-qualified and professional management team with a committed employee base
Objectives of the Issue:
- The company will not receive any proceeds from the Offer for Sale and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.
- Funding capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu (the “Proposed Expansion”) by setting up an additional unit adjacent to the existing facility.
- Purchase of tinting machines and gyroshakers.
- Repayment/prepayment of all or certain of our borrowings.
- General corporate purposes.
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