Gujarat Polysol Chemicals Limited filed DRHP – Do you invest? – Know strategic insights

Gujarat Polysol Chemicals Limited Manufacturing
Gujarat Polysol Chemicals Limited

Gujarat Polysol Chemicals Limited Overview and operation

Gujarat Polysol Chemicals filed DRHP document for INR 414 crores fresh issues and offer for sale (OFS). The company was incorporated as ‘Gujarat Polysol Chemicals Private Limited” in Vapi, Gujarat, India on October 18, 1989. To become a public company before IPO, the name again changed to “Gujarat Polysol Chemicals Limited” on September 21, 2021, and a certificate of change of name was issued on October 13, 2021, by the RoC. The registered and corporate office of Gujarat Polysol Chemicals Limited’ is in Plot No. 1734, Third Phase, GIDC, District – Valsad, Vapi – 396 195, Gujarat, India.

  • Gujarat Polysol is one of the important players in the specialty chemical industry in India.
  • Gujarat Polysol has 3 Manufacturing Facilities, located in Vapi and Sarigam in the State of Gujarat and a unit located in the Union Territory of Dadra & Nagar Haveli and Daman and Diu.
  • The company has a clientele of over 600 with a strong manufacturing capacity of 130,400 MT per annum across the 3 Manufacturing Facilities.
  • Gujarat Polysol is expanding its global footprint. Currently, it exports to countries like Indonesia, Hong Kong, Singapore, South Korea, Germany, China, UAE, Bangladesh, Vietnam & Australia expanding its footprint globally.
  • Apart from manufacturing chemicals, the company also engaged in trading chemical raw materials.

Gujarat Polysol Chemicals Limited Products focus on niche chemicals

The company manufactures various chemicals that can be classified based on end-user industries. The products mainly cater to or are categorized as below.

  • Infra-tech (construction) chemicals
  • Agro-chemicals – pesticide formulations
  • Dyes, pigments, and textile chemicals
  • Leather chemicals

Gujarat Polysol Chemicals limited claims to be a leading manufacturer of various chemicals.

  • The company is a leading chemical manufacturer for the Infra-tech (Construction), agro, dyes, and leather industries in India.
  • It is a leading supplier of dispersing agents in the Infra-tech, dye, pigments, and textile and leather industries.
  • The company is also a leading supplier of powder surfactants in India.
  • It is also a leading manufacturer of polycarboxylate ether (PCE) liquid.
  • The company is also one of the few manufacturers of PCE powder globally and the only manufacturer of PCE powder in India.

Gujarat Polysol Chemicals Limited Founders and Leadership team

The company is run by experienced Promoters and a qualified senior management team with significant experience in the specialty chemical business. Promoters hold an aggregate of 16,806,250 Equity Shares, representing 83.39% of the pre-Offer issued. Shailesh Kumar Balvantrai Desai holds 13,479,550 Equity Shares and Umang Shailesh Desai holds 3,326,700 Equity Shares.

Mr. Shaileshkumar Balvantrai Desai is the promoter, chairman, and managing Director of the Company since its incorporation. He holds a Bachelor of Commerce degree from S.N.H. Commerce & J.P.S. Arts College, South Gujarat University. Mr. Shaileshkumar has over 30 years of experience in the chemical industry and has more than 30 years of experience in different roles within the Company.

Mr. Umang Shailesh Desai is one of the promoters and the whole-time director of the company. He has over 10 years of experience in formulating and implementing marketing strategies.

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Gujarat Polysol Chemicals Limited Revenue and profits

The company engaged in both manufacturing products and trading of chemical raw materials and edible oil including crude palm oil and soyabean oil. The revenue from the trading of goods is INR 562.50 million, INR1,137.35 million, and INR 1,340.14 million in FY 2021, FY 2020, and FY 2019 respectively.

The total income has declined from INR 4,397.98 million in FY 2019 to INR 3,804.32 million in FY 2021. However, profit has increased from INR 128.00 million in FY 2019 to INR 398.39 million in FY 2021 which is a growth of CAGR of 76.42% between the Fiscals 2019 and 2021.

Gujarat Polysol Chemicals Limited fast growing company – Valuation Parameters

Gujarat Polysol Chemicals Limited has been registering strong EPS over the years. The debt-equity ratio has been negligible over the years and has declined over the period mentioned. Similarly, all other parameters such as the return on equity, ROCE, and profit margin look strong.  Looking at the numbers below one can invest in the company’s IPO if the valuation is good.

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All amounts in INR Million except percentages
(Year ended March 31)
Revenue from Operations4,387.584,404.563,796.06
Total Income4,397.984,409.383,804.32
Profit After Tax for the Year128.00 201.85398.39
EBITDA Margin7.26%8.78%16.94%
Net Profit %2.92%4.58%10.49%
Return on Equity17.46%21.57%28.08%
Return on Capital Employed19.69%22.19%27.95%
Net Debt / Equity1.070.740.54
Earnings Per Share-Diluted (in INR)6.3810.0219.77
Net Cash from Operating Activities167.14279.6995.73

Customers of Gujarat Polysol Chemicals Limited

The company has built a strong clientele over the years. It has long-term relationships with various Swiss, US, and German multinational and domestic companies including Ado Additive Technologies Limited, Agrosyn Impex, Master Builders Solutions India Private Limited, Molecules Conchem Private Limited, Normet India Private Limited, South India Cashew Corporation, Sulphur Mills Limited, Chryso India Private Limited, Ecmas Construction Chemicals Private Limited, Lonsen Kiri Chemical Industries Limited, Shivani Detergents Private Limited, Technochem Construction Chemicals Limited, and Sanghavi Industries Private Limited. Top 10 customers contributing over 49% of the total revenue in FY 2021.

Competitors of Gujarat Polysol Chemicals Limited

The chemical market in India is fragmented. However, Gujarat Polysol Chemicals Limited manufactures niche products. Hence, the company competes with large multinational companies with greater financial, manufacturing, research, and development. Some of the listed domestic competitors are Himadri Speciality Chemicals Ltd. (HPCL) and BASF India. BASF is a large multinational company with total revenue of INR 95,583 million while that of HPCL is INR 16,795 million in FY 2021.

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Do you invest?

The specialty chemical industry in India is bound to grow with strong support from government policies. The recent downturn in China’s specialty chemicals industry is an opportunity for Indian manufacturers. India has a cost advantage with the required talent and technology to catch this opportunity. The government’s PLI scheme to incentivize the domestic chemical industry will further boost production.

Gujarat Polysol Chemicals Limited is planning to expand its manufacturing facilities across India to reach out to its customers through organic and inorganic growth. The company manufactures 87 products to customers in 18 countries as of March 2021. Gujarat Polysol is planning to expand into additional products to meet its customer demand. The chemical industry is a buzzing sector in India now. These factors will add to the top line of the company. Investing in the company’s IPO will be right provided the valuation of the equity share is reasonable.