Business Profile of the Paramesu Biotech Limited
Paramesu Biotech is a leading manufacturer of maize-based speciality products in India, with an installed capacity of 800 TPD. They offer a diverse portfolio of products, including native maize starch, modified starches, liquid glucose, maltodextrin powder, and co-products. With a capacity utilization of 93.09%, they are one of the few companies in the country specializing in different types of modified starches. The company operates in Devarapalli, Andhra Pradesh, and has a strong presence in both domestic and international markets.
They have exported their products to over 10 countries across South East Asia and the Middle East. The company's Devarapalli facility, located in Andhra Pradesh, is strategically located near primary sources of raw materials and major transport routes.
Paramesu Biotech Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to XXXX Equity Shares aggregating up to Rs. 800 million. Nothing from those proceeds of OFS will be allotted to company.
- Paramesu Biotech IPO offer only has fresh issue of Rs. 6, 000 million. As per DRHP document, the company aims to utilize IPO proceedings towards capital expenditure for setting new plant, payment of certain borrowings and corporate general purposes.
| Particulars | Estimated Amount |
| Funding the capital expenditure requirement for setting up of new plant of 1200 TPD | 3300 |
| Payment of certain borrowings availed by company | 850 |
| General Corporate Purposes | XXXX |
(Rs. Million)
IPO Details of Paramesu Biotech Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | Rs.5 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity shares |
| Aggregating up to Rs.6,000 Million | |
| Fresh Issue | XXXX Equity shares |
| Aggregating up to Rs.5, 200 million | |
| Offer For Sale | XXXX Equity shares |
| Aggregating up to Rs.800 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Paramesu Biotech Limited IPO
The issue price of Paramesu Biotech Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 440 crores as well as offer for sale of Rs. 1060 crores.
Launch Date of Paramesu Biotech Limited IPO
The IPO opening date of Paramesu Biotech hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Paramesu Biotech Limited Financial Statements
| Particulars | For period ended Sep 30, 2024 | FY24 | FY23 | FY22 |
| Income | ||||
| Revenue from Operations | 4075.94 | 6278.47 | 6239.29 | 4949.05 |
| Other income | 18 | 14.38 | 14.15 | 16.98 |
| Total Income | 4093.94 | 6292.85 | 6253.44 | 4966.03 |
| Expenses | ||||
| Cost of materials consumed | 3032.69 | 4641.7 | 4315.04 | 3527.19 |
| Purchases of stock-in-trade | 217.68 | 196.87 | 720.26 | 210.37 |
| Changes in Inventories of Finished goods | -62.26 | -50.98 | 2.64 | -3.22 |
| Employees' benefits expense | 88.18 | 167.26 | 139.84 | 116.27 |
| Finance costs | 103.92 | 152.55 | 85.5 | 100.61 |
| Depreciation and amortisation expense | 56.95 | 83.01 | 55.71 | 53.81 |
| Other expenses | 296.32 | 558.17 | 494.24 | 500.95 |
| Total Expenses | 3733.51 | 5748.58 | 5813.23 | 4505.98 |
| Profit / (loss) before tax | 360.43 | 544.27 | 440.21 | 460.05 |
| Profit / (loss) for the year | 268.5 | 403.37 | 325.24 | 339.65 |
| Particulars | Paramesu Biotech | Sanstar | Gujarat Ambuja Exports | Gulshan Polyols | Sukhjit Starch and Chemicals |
| Financial KPI | |||||
| Revenue from Operations | 4075.94 | 10672.71 | 22150.8 | 13779.76 | 13753.45 |
| EBITDA | 503.3 | 981.41 | 2157.1 | 580.77 | 1280.22 |
| EBITDA Margin (% | 12.35 | 9.2 | 9.74 | 4.21 | 9.31 |
| Profit after Tax (PAT) | 268.5 | 667.67 | 1460.2 | 177.57 | 499.58 |
| PAT Margin (%) | 6.56 | 6.17 | 6.45 | 1.28 | 3.61 |
| Total Borrowings | 2161.75 | 1276.36 | 1560.1 | 3488.72 | 3244.9 |
| Net worth | 2001 | 2159.12 | 28990.5 | 5903.19 | 5026.44 |
| ROE (%) | 13.42 | 30.92 | 5.04 | 3.01 | 9.94 |
| ROCE (%) | 10.74 | 25.43 | 5.12 | 2.77 | 11.48 |
| Debt - Equity Ratio | 1.08 | 0.59 | 0.05 | 0.59 | 0.65 |
| Fixed Assets Turnover Ratio | 1.52 | 5.29 | 2.25 | 2.66 | 2.64 |
| Cash Conversion Cycle (in days | 60 | 48 | 97 | 53 | 81 |
| Operational KPI | |||||
| Total installed capacity in metric tonnes per day | 800 | 1100 | N.A. | 600 | 1600 |
| Capacity Utilization (%) | 93.34 | 86.19 | N.A. | N.A. | N.A. |
| No. of customers | 518 | 528 | N.A. | N.A. | N.A. |
Paramesu Biotech Limited Promoters & Shareholding
As of date, there are five promoters of the company.
The promoter in aggregate holds 91.68% of the paid-up share capital of company.
| Name of the Shareholder | Equity Shares held | % of pre-offer paid-up equity capital | No. Of Eq. Shares Offered |
| Promoter | |||
| Unimark Business Solutions Private Limited | 21,53,33,300 | 82.01 | Aggregating up to Rs. 800 million |
| Speedfast Tracom Limited | - | - | |
| Ananda Swaroop Adavani | 86,93,300 | 3.31 | |
| Mani Swetha Tetali | 93,20,000 | 3.55 | |
| Himabindu Tetali | 73,86,700 | 2.81 | |
| Total | 24,07,33,300 | 91.68 | |
| Promoter Group | |||
| Pavuluri Naga Venkata Munindra | 13,33,300 | 0.51 | |
| Total | 13,33,300 | 0.51 | |
| Grand total | 24,20,66,600 | 92.19 | |
Should You Subscribe to Paramesu Biotech Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Paramesu Biotech Limited:
Leading manufacturer
The company is a leading manufacturer of maize-based speciality products in India. The company offer diverse product portfolio including native maize and modified maize starches, liquid glucose, maltodextrin powder, and many more products.
Over the years the company has expanded its offerings, established a strong market position side-by-side focusing on quality. Because of which, the company has established a presence domestically and abroad. The maize-based speciality products industry faces high entry barriers, including capital costs, lead time, and limited availability of raw materials. The company has certified its Devarapalli facility in accordance with various standards, making it the fourth largest company in India.
The company's B2B nature also creates substantial exit barriers for customers, leading to a preference for continuity with existing suppliers.
Diversified customer base
The company's growth is directly linked to the expansion in end-user industries. Over the years the company has diversified its customer base by introducing new products careering to different industry clients. Paramesu Biotech is one of the few companies in India specializing in different types of modified starches.
These products are used in variety of places like ingredients, thickening agents, stabilizers, sweeteners, emulsifiers, etc. The company's growing presence in international markets and ability to adapt to market demands further solidifies its position as a global player.
| Industry/ Sector | 6-mon period ended Sep 30, 2024 | FY24 | FY23 | FY22 |
| % of Revenue from Operations | ||||
| Food | 51.53 | 41.88 | 41.5 | |
| Paper | 15.31 | 18.35 | 20.73 | 20.26 |
| Animal nutrition | 12.65 | 15.51 | 14.18 | 17.7 |
| Others | 20.51 | 24.26 | 29.37 | 20.54 |
Strategically located manufacturing plant
Companies manufacturing facility in Andhra Pradesh is strategically located with ample scope for expansion. At present, the Deverapalli facility has an aggregate installed capacity of 800 tons per day. Facility's access to and sustainable source of water reducing reliance on external water supply systems. At the same time, the facility benefits from supply chain efficiencies, because it is less than 100 km from Kakinada port and under 250 km from Visakhapatnam port. The strategic location helps in reducing transportation costs for distribution of products to domestic and international markets.
The company also has two silos for storage facility for storing its raw material and dedicated storage spaces for finished goods with a total capacity of 7,500 MT.
Consistent capability building
Company’s currently operated manufacturing facility in Deverapalli has capacity utilization of 93.34% as of September 30, 2024. The company has experienced continuous growth in capacity, with capital expenditure and gross block increasing over the years. The company's experience of strategically adding capacity and commitment to capital efficiency has resulted in one of the highest PAT margins among peers in Fiscal 2024.
If the company keeps relying heavily on repeat customers for most of its revenue and fails to diversify and expand, then their operation and finances may stagnate.
Future plans
- Augment capacity by setting up a new manufacturing facility in Central India
- Expand global presence
- Increase revenue contribution from derivative and value added product
- Focus on production efficiencies and streamlining costs
- Focus on deleveraging and enhance financial flexibility
Risk Factors of Paramesu Biotech Limited:
Cost of raw material
For the company to run its operations, it requires maize as the primary raw material. The company offers a diversified portfolio of maize-based speciality products, including native maize starch, liquid glucose, corn steep liquour, and enriched fiber. The company procures raw materials directly from farmers harvesting maize and traders. Since the company doesn’t bind into a contract to buy, the cost of raw material procured from local farmers and traders is subject to price volatility and unavailability due to factors beyond the company's control. Factor could be numerous like bad weather conditions, excess supply and demand dynamics, inflation, and governmental regulations.
The company also faces risks of discontinuing supply from existing suppliers and inability to procure raw materials from alternate suppliers on commercially acceptable terms. This could affect inventory management and product manufacturing, leading to increased procurement costs.
Strong relation with clients
The company has established strong relationships with customer and as can be seen from table below, the company earned significant portion of its revenue from repeat orders. The company during six month period ended Sep 30, 2024 and Fiscals 2024, 2023 and 2022 served 518, 756, 602 and 594 customers. Out of which 399, 423, 353 and 310 were repeat customers.
| Industry/ Sector | Six month period ended September 30, 2024 | FY24 | FY23 | FY22 |
| No. of repeat customers | 399 | 423 | 353 | 310 |
| % of our revenue from operations | ||||
| Revenue from repeat customers | 89.42% | 85.13% | 87.09% | 85.92% |
Dependence on manufacturing facility
As of filing this DRHP, the company only operated one manufacturing facility, which increases its importance for the company. The company relies on effective management an optimum utilization of the facility. The facility is subject to various operating risks, including breakdowns, equipment failures, industrial accidents, power interruptions, and natural disasters. The manufacturing facility is situated in Devarapalli, Andhra Pradesh, with an installed capacity of 800 TPD. As per recent assessment of Sep 30, the facility is running at an optimum capacity utilization level of 93.34%.
Any significant malfunction or breakdown of machinery, equipment, and automation systems may result in significant repair, and maintenance downtime. The disruption can cause company both monetarily and non-monetarily harm to company, affecting its financials.
Revenue concentration
The company relies heavily on top customers for its revenues. The top 10 customers accounted for around one-third of total revenue from operations and top 20 customers accounted for more than 45% of total revenue. Since they lack long-term supply arrangements and any loss of customers or reduced orders from top clients could impact the company's fundamentals and financials.
| Particulars | Six month period ended September 30, 2024 | FY24 | FY23 | FY22 |
| % of revenue from manufacturing operations | ||||
| Top 10 Customers | 33.78% | 30.04% | 29.17% | 35.95% |
| Top 20 Customers | 45.29% | 43.17% | 43.77% | 48.23% |
Capex plans
The company plans to use up to Rs. 3,300 million from its net proceeds to fund capital expenditure for a new plant in Madhya Pradesh. The proposed 1,200 TPD plant will be set up on land allotted to the company by the Government of Madhya Pradesh. The estimated cost of plant and machinery is Rs. 2,280.97 million, while electrical equipment and instrumentation is Rs. 320.20 million. The company has shortlisted vendors and obtained quotations but the actual amount and timing of future capital requirements may differ from estimates due to unforeseen delays, cost overruns.
Obtaining licenses and following regulatory changes could delay the proposed facility, adversely affecting the company's business, results of operation, and prospects. The company's manufacturing process requires precise temperature control and precision. The company maintains a comprehensive storage infrastructure, including two maize storage silos, maize sheds, lean-to-roof sheds, and dedicated storage spaces for finished goods. These funds are based on current conditions and internal estimates and may be subject to changes in external circumstances or costs. The company may revise its business plan and management estimates, resulting in changes in funding requirements.
Any variation in the Objects of the Offer would require a special resolution of shareholders, and the promoter or controlling shareholders will be required to provide an exit opportunity to shareholders who do not agree to the proposal.
Revenue from exports
The company’s customers are both situated in domestic market as well as foreign market. The domestic market share of total revenue as of Sep 2024 stands at around 78%, whereas revenue from exports stands at around 23%. The company has been diversifying its revenue stream from both domestically and internationally. The company exported its products to over 10 countries in South East Asia and the Middle East.
Concentration of clients in the South East Asian region exposes it to adverse economic or political circumstances, including economic slowdowns and inflationary trends. The company faces risks from downsizing orders by clients beyond the company's control, such as changes in strategic priorities, reduced global operations, and market dynamics, could result in customer loss. To mitigate risks, the company intends to enter additional geographies and service segments.
| Particulars | 6-mon period ended Sep 30, 2024 | FY24 | FY23 | FY22 |
| % of revenue from operations | ||||
| Domestic Sales | 76.86% | 78.75% | 81.87% | 78.08% |
| Exports Sales | 23.14% | 21.25% | 18.13% | 21.93% |
| Geography | 6-mon period ended Sep 30, 2024 | FY24 | FY23 | FY22 |
| % of revenue from operations | ||||
| South East Asia | 100 | 100 | 98.5 | 100 |
| Middle East | - | - | 16.99 | - |
Transportation and storage
Maize quality is influenced by factors such as weather conditions, soil fertility, and agronomic practices, resulting in variations in grain size, moisture content. The company faces inherent risks in its products, including contamination due to fungi or bacteria, product tampering during transport or storage, and product recalls if they fail to meet quality standards. The company relies on local stock-houses and maintains two maize storage silos at its Devarapalli Facility, which have over 20,000MT of storage capacity.
Any lapses or mistakes by these stockhouses could lead to contamination or damage to the stock. The company's success depends on uninterrupted supply and transportation of raw materials. The company is dependent on third-party transportation providers for raw material and product delivery and disruptions in their arrangements may adversely affect the business.
Paramesu Biotech Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Paramesu Biotech Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
