20 June 2023
Pentagon Rubber, among the leading engineering component players offering a wide range of rubber conveyor belts, transmission belts, rubber sheets and elevator belts, today announced the issue dates and price band for its upcoming IPO. The company issue will open on 23rd June for the Anchor investors and from 26th June 2023 till 30th June 2023 for the public at large. The company also announced its price band of Rs. 65-70 per equity share for the book-building issue comprising 23,10,000 equity shares (face value of Rs. 10 each).
The company’s issue size will be Rs. 16.17 crore at the upper price band. Of the 23,10,000 equity shares (FV of Rs. 10 each) on offer, 330,000 equity shares have been reserved for HNIs and 10,94,000 equity shares for the QIB portion. 770,000 equity shares are reserved for retail investors, while 116,000 equity shares are reserved for the market maker. Beeline Capital Advisors Private Limited is the book-running lead manager to the issue, and Link Intime India Private Limited is Registrar to the issue.
The proceeds from the public offering will be utilised to meet the working capital requirements, general corporate purpose and issue expenses. Being a working capital intensive, the company will be utilising the additional working capital for the expansion of its business activities. According to RHP, utilisation of initial public offering proceeds will help the company to increase its turnover by 55-60%.
The company is already undergoing an ambitious expansion program funded through internal accruals and borrowings. The expanded capacity by December 2023 will be 600,000 meters or up 2.5 times the existing capacity of 240,000 meters. Being a high working capital-intensive business, IPO proceeds will enable the company to manage higher scale more efficiently. As per the RHP, the utilisation of IPO proceeds will help the company increase its turnover by 55-60%. The company also announced earlier that in the next 24 months, the Company expects to clock three times its present annual revenue
For the year ended March 31, 2023, Pentagon Rubber’s total revenues stood at Rs. 35.12 crore. The company’s EBITDA stood at Rs 4.29 crore, and Net Profit stood at Rs. 3.09 crore. Meanwhile, the company reported total revenues of Rs 29.96 crore for the nine months ended December 31, 2022, while net profit stood at Rs 2.16 crore.
Conveyor belts demand has been robust owing to concerted efforts of the government to modernise infrastructure at the mines, the thrust of Make in India, Aatmanirbhar Bharat initiatives and strong demand from Indian infrastructure, chemicals, energy, and chemicals sectors, among others. In 2020, Coal India announced that it would make investments of Rs. 15,700 crore in conveyor belts and wagons – which is also fuelling high demand for the products across the country.
Incorporated in 2004, Pentagon Rubber has been promoted by Anil Jain, Lalit Jain, Ashish Jain, and Mr. Saurabh Jain. The company’s manufacturing unit is located at Dera Bassi, Punjab (25 KMS from Chandigarh city). Pentagon Rubber has one of India’s longest conveyor belting presses, with a production capacity of 21mtr in a single stroke. This technology allows the company to produce conveyor rubber belting up to 3150 KN/m, making it one of the top manufacturers in India. The production capacity is over 300 sq km of conveyor rubber belt per year. Besides, the company has a modern laboratory of international standards that can produce conveyor belts as per DIN, BS, IS, ISO, SABS, AS, GOST, and CAN standards. Owing to its certifications and product development prowess, the company is registered as an approved vendor with various Maharatna, Navratna, Miniratna, various MNCs and major Corporate Groups within the country and abroad.