The company got incorporated as ‘Ricasil Ceramic Industries Private Limited’ in Himmatnagar, Gujarat, in 2008. Under a special resolution passed by shareholders in 2018, the company was renamed as ‘Exxaro Tiles Private Limited’. In 2020, the company became a public limited company. Exxaro Tiles Limited (after this referred to as ‘The Company’) is coming up with an IPO, which opens for subscription on August 4, 2021. Here is all you would like to know about the Exxaro Tiles Limited IPO.
- Engaged in the business of manufacturing and marketing of vitrified tiles used for flooring
- Exxaro offers 1,000+ product designs which are available in six different sizes
- The company also supplies wall tiles and outsources the manufacturing of the same
- With over 2,000 registered dealers, Exxaro supplies products for various projects, including residential, commercial, educational institutions, hotels, hospitals, government, religious institutions, etc.
- Presence in 24 states/union territories and international supplies in 12 countries, exports accounting for approximately 14% of revenues in fiscal 2021
The company commenced business in 2008 as a firm manufacturing frit, raw material used in tile manufacturing. After that, it evolved and diversified into becoming a manufacturer of vitrified tiles.
There are two parts of the products:
- Double charge vitrified tiles, wherein a press imprints the pattern on tiles with a double pigment layer, 3-4mm thicker than other tiles
- Glazed vitrified tiles are flat slabs manufactured from ceramic materials like clay, feldspar, and quartz. These materials, and a few more, are fired at high temperatures to ensure strength and low water absorption
There are two state-of-the-art manufacturing facilities in Padra and Talod in Gujarat. The total installed production capacity is 1,32,00,000sq.mt. per annum.
The market size:
Listed majors include Kajaria Ceramics, Prism Johson, Somany Ceramics, Asian Granito, Cera Sanitaryware, Orient Bell and Nitco.
Unlisted companies include RAK Ceramic, Simpolo Ceramics, Qutone Ceramic, Varmora Tiles, Sunhearrt Ceramic, etc.
Key company strength areas
- State of the art two manufacturing facilities
- Widespread sales and dealer network across 24 states/union territories across India
- A wide range of product portfolios with over 1,000 designs in six different sizes
- Presence in an industry that is witnessing strong growth, domestically and internationally
- Highly experienced management team with significant industry experience
About the promoters
Mr Mukeshkumar Patel, Mr Dineshbhai Patel, Mr Rameshbhai Patel and Mr Kirankumar Patel are the promoters of Exxaro Tiles. They manage and control the business operations and possess significant industry experience.
Financial Profile of Exxaro Tiles
Below is the condensed financial information:
Comparison with other industry peers
Capacity and utilization comparison with peers
|Fresh issue (1,11,86,000 equity shares)||Rs 134.2 Cr|
|Offer for sale (22,38,000 equity shares)||Rs 26.9 Cr|
|Gross issue size||Rs 161.1 Cr|
Utilization of proceeds:
- Repayment/prepayment of all or certain borrowings (Rs 50 Cr)
- Funding working capital requirements (Rs 45 Cr)
- General corporate expenses
India’s share of global production of tiles is constantly increasing and is second only to China, whose share is declining. Further, India has also witnessed an increase in exports.
Given the solid domestic housing and infrastructure-led demand and exports, we expect the tiles industry to thrive over the coming few years.
The business is stable with growing revenues and expanding margins. The return on net worth is in line with the industry peers.
Exxaro operates in a highly competitive space, split between organized and unorganized players. However, there seems to be enough space for all given the domestic and export demand.
In conclusion, we recommend that investors consider investing in this IPO.
The information provided in the red herring prospectus filed by the company with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend that the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks. Therefore, it should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.
About the author
The author is a senior finance professional with over fifteen years of work experience in corporate finance. He has an affinity for matters relating to personal finance and investment management. Through his writing, the author wants to share his knowledge and understanding of the subject.
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