Three M Paper Boards Limited plans to raise Rs. 40 crores from public issue

Mumbai:  Three M Paper Boards Ltd, a Mumbai based company engaged in the business of manufacturing Recycled Paper-based Coated Duplex Board products since over 3 decades, is planning to raise up to Rs. 40 crores through its SME IPO. The company has received approval to launch its public issue on SME platform of BSE Ltd (BSE SME). The Coated Duplex Boards produced by the company are made from 100% recycled wastepaper and are fully biodegradable, making them an eco-friendly choice for packaging various FMCG and pharmaceutical goods. Comfort Securities Limited is the Book Running Lead Manager to the issue.

The company is offering 57,72,000 fresh equity shares to be offered under the IPO; Shares to be listed on SME Platform of BSE Limited (BSE SME) 

Highlights:-
    • Three M Paper is proposed to come up with a fresh public issue of up to Rs. 40 crores
    • The Company is offering 57,72,000 fresh equity shares to be offered under the IPO
    • The Company is a leading manufacturer of Coated duplex paper boards, utilizing 100% recycled wastepaper to produce biodegradable finished products
    • Funds raised through the issue will be used for business expansion including purchasing machinery, factory building extension, repayment of loans, working capital infusion and general corporate purposes
    • Company’s shares are proposed to be listed on SME Platform of BSE Limited (BSE SME) 
    • For FY23-24 company reported total income of Rs. 276.02 crore and Net Profit of Rs. 11.35 crore
    • Comfort Securities Limited is the Book Running Lead Manager of the issue.

The initial public offering of Rs. 40 crores consist of a fresh issue of 57,72,000 equity shares of Rs. 10 each. The net proceeds will be utilized for various purposes: Rs. 14 crores will be allocated towards capital expenditure, including the purchase of a Plastic-Fired Low-Pressured Boiler, which will use waste plastic for power generation and significantly lower power costs. Additionally, Hot & Soft Nip Calendars will be acquired to elevate product quality, enabling premium pricing and aligning with customer preferences. The funds will also support a factory building extension to increase storage capacity and the acquisition of a sheet cutter to enhance production speed. Rs. 10 crores will be allocated for working capital and Rs. 7 crores for term loan repayment, which will smoothen operations, improve cash flow management, and lower interest costs. The remaining funds will be used for general corporate purposes and issue expenses.

Three M Paper Boards Limited (Formerly known as Three M Paper Boards Private Limited and Three M Paper Manufacturing Company Private Limited), established in 1989, is one of the ISO-9001 certified companies engaged in the business of manufacturing recycled paper-based Duplex Board products ranging from 200 to 500 GSM used in various packaging applications across industries such as food and beverage, pharmaceuticals, cosmetics, and consumer goods and supplies its high-quality duplex board paper products in both the domestic and international markets. 

Company’s products are made out of 100% recycled waste-paper and are completely biodegradable. The company sets out to undertake various innovations in both the product-development side as well as in manufacturing processes on a consistent basis. The company's manufacturing facility in Chiplun, Maharashtra is spread over an area of more than 30 acres has an installed capacity of 72,000 tons per annum (TPA) along with 4 MW captive power plant and is equipped with state-of-the-art technology for manufacturing paper boards of the global quality standard suitable for high-quality print jobs in the packaging sectors across the globe. With a vast network of over 25 dealers nationwide and export operations in more than 15 countries, Three M Paper Boards maintains a broad market reach and a strong industry presence.

For the financial year ended on March 31, 2024, Three M Paper Boards reported revenue from operations at Rs. 272.23 crore, EBIDTA of Rs. 27.07 crore and net profit of Rs. 11.35 crore. The EBITDA was up by 25% as compared to 21.66 crores of previous financial year. The net profit was up by 170% as compared to 6.62 crores of previous financial year. The Company reported an increase in EBITDA Margin from 6.57% in previous year to 9.94% in current year. Also, the PAT margin increased from 2.01% in previous year to 4.11% in current year.

The Indian paper industry plays a noteworthy role on the global stage, contributing approximately 5% to the world's paper production. The industry's economic impact is substantial, with an estimated turnover exceeding Rs. 80,000 crores, contributing to approximately Rs. 5,000 crores to the national exchequer. In terms of employment, the industry directly engages 5,00,000 individuals and indirectly supports an additional 1.5 million jobs. A majority of the paper mills comprise of diverse technological landscape, ranging from the oldest to the most modern technologies. 

According to industry sources, the paper & pulp industry has an annual turnover of Rs. 700 billion, with an estimated 861 paper mills, of which 526 are operational. The collective installed capacity stands at an impressive 30.73 million tonnes, portraying the industry's robust and expansive presence.

The Indian paper and packaging industry are experiencing robust growth, poised for significant expansion in the coming years. Valued at USD 50.5 billion in 2019, the industry is projected to reach USD 204.81 billion by 2025, demonstrating an impressive CAGR of 26.28% from 2020 to 2025. This remarkable growth is attributed to several factors, including the flourishing e-commerce, food processing, pharmaceuticals, FMCG, manufacturing, and healthcare sectors.

Industry source: Report by Dun & Bradstreet, published in DRHP of Three M Paper Boards.