To use IPO proceeds for paring debt, funding Telangana plant, says Prince Pipes

The Rs 500 crore initial public offering (IPO) of Prince Pipes opened for subscription today with a price band at Rs 177 to Rs 178 per share.

The company has plans to use the IPO proceeds towards Telangana Plant and reduce leverage at promoter level.

Discussing  all this in detail Parag Chheda, executive director of Prince Pipes said, they have plans to raise almost Rs 180 crore for the Telangana plant, which is  going to be a state-of-the-art technology. “Logistic costs play a major role, so we need to have our injection moulding footprint in the southern zone," he added.

Initially, we intend to have production capacity of about 52,000 tonnes from the Telangana plant. The total revenue expected out of the entire unit of injection moulding from the plant would be about Rs 250-300 crore in two-three years’ time, he said.

With regards to debt, he said, “The promoters debt is to the extent of Rs 200 crore and because we have the secondary offer-for-sale (OFS), which is to the tune of Rs 250 crore by which we would be zeroing down our promoter level debt completely.”

"Currently, our net debt is to the tune of Rs 300 crore and we intend to repay Rs 50 crore through our IPO proceeds. So, the net debt will come down to Rs 250 crore," said Chheda.

Talking about business outlook, he said volume growth is important. "The company has been growing consistently with about 12-15 percent year-on-year (YoY) in terms of the volume growth and expect the numbers to be sustainable in coming times,” he stated.

The company caters to various applications be it on agriculture, irrigation, plumbing, drainage and sewage and the most promising sectors in coming times are plumbing and drainage, said Chheda.

When asked about the impact of construction ban in North India because Prince has about 40 percent sales from that region, he replied, “We do not see major impact happening and we are quite optimistic that the revenues coming from the north would continue to hover around 37-40 percent.”