Deep Polymers Limited IPO

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(i) Deep Polymers Limited.
The Company is engaged in manufacturing of Colour and Additive Masterbatches for engineering plastics and compounds that includes a wide range of quality products like Antifab fillers, Transparent fillers, Colour fillers, which is used as cost-effective replacements for polymers and acts as anti-fibrillating, anti-blocks, anti-slip agents.

(ii) The journey of Deep Polymers Private Limited !!

a) 1992-The Company has started manufacturing world-class Masterbatches 600 MT productions per year.
b) 2003-04- The production gets 10x and company started manufacturing 6000 MT productions per year.
c) 2008-09- The production gets 100x and company started manufacturing 60000 MT productions per year.
d) 2017-18-  The company has achieved production of 12000 MT Colour Masterbatches and 25000 MT filler Masterbatches

(iii)  What are Masterbatches and their uses?

a) Masterbatches are an integral part of everyone’s life in today world where the use of plastic has become a necessity. The plastic which is used for packaging trays, boxes, cups and vending packaging, baby products, and protection packaging etc. gets its color from masterbatches.
b) The Deep Polymers manufactures different types of Masterbatches such as  White, Black, Colour, UV, and Additives.
c) Uses- The Masterbatches can be used to color any thermoplastic material by any process and they are used in packaging, Building and Construction, Consumer goods, Transportation, Electrical and Electronics, and Textiles industries
Thermoplastic Materials
> PP
> PS
1. Masterbatches                                                                        2. Antifab Fillers                                       





Objects of the Deep Polymers Limited IPO:

Objective of

Deep Polymers Limited IPO

are: 1. OFS of 24,50,000 Equity Shares by selling shareholders at a price of 40.00 per share. 2. Fresh Issue by the Company of 13,60,000 Equity Shares at a price of 40.00 per share. a. To Meet working capital requirement. b. To Meet the Issue Expenses. c. To Meet General corporate purpose.

Deep Polymers Limited IPO Details:

Open Date: Aug 08 2018
Close Date: Aug 13 2018
Total Shares: 3,810,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price IPO
Issue Size: 15.24 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 40 Per Equity Share
Listing At: BSE SME
Listing Date: Aug 23 2018

Promoters And Management:

Promoters of Deep Polymers Limited Company are: (i) Mr. Rameshbhai Bhimjibhai Patel aged 52 years, is the Managing Director of the Company since September 13, 2005. He is also a promoter of the Company. He completed Higher Secondary from Gujarat secondary and Higher Board. He has an experience of 20 years in the field of Plastic Industry of the Company. (ii) Ms. Dhrupa Thakkar, aged 28 years, is the Company Secretary and Compliance Officer of the Company. She has been associated with the Company since May 01, 2018. She is responsible for assuring compliance with the provisions of Companies act 2013, SEBI act 1992, along with other statutory act, rules and regulations formed thereunder. (iii) Mr. Debsankar Das, aged 28 years, is Chief Financial Officer (CFO) of the Company. He has been associated with the Company since inception. He holds a degree of Bachelor of Commerce. He is looking after all the accounts and finance in our Company. He was appointed as Chief Financial Officer on April 30, 2018.

Capital Structure:

(i) Authorized Share Capital (1,20,50,000 Equity shares at FV@10) 12.050 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (1,05,11,600 Equity Shares at FV@10) 10.051 Cr
(iii) Present Issue ( 38,10,000 Equity Shares at FV@10) 3.81 Cr
(iv) Reservation for Market Maker(1,92,000 Shares at FV@10) 19.2 Lacs
(v) Reservation for QIB & HNI (18,09,000 Equity Shares at FV@10) 50%
(vii) Reservation for Retail (18,09,000 Equity Shares at FV@10) 50%
(viii) Paid Up Share Capital after the issue 11.87 Cr

Financials of Deep Polymers Limited IPO as per DRHP:

1. Assets and Liabilities Key Parameters
Year Asset(lacs) Liabilities(lacs) Net Worth(lacs) Book Value D/E  RONW Receiveable days
FY14 2554.68 1,660.48 894.2 163.89 1.9 -4% 90
FY15 2873.62 1,909.55 964.07 176.70 2.0 7% 127
FY16 2777.43 1,333.84 1443.59 151.07 0.9 -2% 120
FY17 3248.35 1,675.18 1573.17 164.63 1.1 8% 128
FY18 3145.90 1,356.11 1789.79 17.03 0.8 12% 181
Post Issue 2333.79 19.66 0.6 9%
2. Profit n Loss Key Parameters
Year Revenue(lacs) PAT(lacs) EBITDA Margins Profit Margins Outstanding Shares(lacs EPS
FY14 3,473.07 -34.28 4.1% -1.0% 5.456 -6.28
FY15 4,113.89 69.4 7.4% 1.7% 5.456 12.72
FY16 3,600.85 -33.48 3.2% -0.9% 9.556 -3.50
FY17 4,274.43 129.68 8.3% 3.0% 9.556 13.57
FY18 4,110.09 217.02 10.1% 5.3% 105.116 2.06
Post Issue 118.716 1.83
3. Cash Flow Statement(all figures in lacs)
Particulars FY18 FY17 FY16 FY15 FY14
(i) Net Cash Generated from Operation 55.41 -306.78 -103.33 245.6 106.36
(ii) Net Cash Generated from Investment -6.35 -21.7 -45.45 -36.82 3.48
(iii) Net Cash Generated from Financing Activity -22.69 310.2 174.54 -208.36 -110.4
(iv) Total[ (i)+(ii)+(iii) ] 26.37 -18.28 25.76 0.42 -0.56
(v) Cash and Cash Equivalents at the Beginning of the Year 8.5 26.78 1.02 0.6 1.16
(vi) Cash and Cash Equivalents at the end of the Year 34.87 8.50 26.78 1.02 0.60
Key Notes 1. The Revenue and PAT in the last 5 years are not consistent.[Red Flag] 2 The PAT has risen 68% in FY18 on decreasing revenue raises the concern of just before the IPO.[ Red Flag] 3.  The Receivable Days has almost doubled in the last 5 years.[ Red Flag] 4. The Company is continually defaulting in TDS deposit in the last 5 years.[ Red Flag]. 5. The P/E[Post Issue]=21.85[ Fully Priced Issue]. 6. The P/B[Post Issue]= 2.03.  

Comparison With Peers:

We believe that none of the listed companies in India offer products or services across the various business segments in which company operate. However, as per DRHP the company has shown Plastiblends and Clariant Chemica which are trading at P/E of 20 and 48.1.

Recommendation on Deep Polymers Limited IPO:

Deep Polymers Limited IPO

Rating by InvestorZone team: 3/10 1-5: Fair 5-7: Good 7-10: Excellent

Lead Manager of Deep Polymers Limited IPO:

  1. Gretex Corporate Services Private Limited

Registrar of Deep Polymers Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Deep Polymers Limited Block No. 727B/H Bhavi Industries, Rakanpur (Santej), Tal Kalol, D Gandhinagar– 380 060, Gujarat, India. Phone No. +91-2764-286032 E-mail: Website:

Bid Details of Deep Polymers Limited IPO as on
13 Aug 2018 | 11:59:03 PM

Category No.of shares offered No. of shares bid
1,809,000 4,155,000
1,809,000 876,000
192,000 192,000
3,810,000 5,223,000
QIBs+HNIs Subscription 2.30X
Retail Subscription 0.48X
Total Subscription 1.32X

Discussion on Deep Polymers Limited IPO:

    Surprised first hr subscription of qib+hni quota. This may be a trick to lure the innocent retailers. Please be careful and just wait whether we get any substantial increment in subscription figure at the end of the day.

    The Company is continually defaulting in payment of TDS.

    (i) DRHP Page#156
    1. Prior Years= Rs.1,53,196
    2. 2014-15= Rs.1983
    3. 2015-16= Rs.109
    4.. 2016-17=Rs.597
    5. 2017-2018= Rs.4,38,494

    (ii) DRHP Page #160
    There Partnership Firm Deep Plast Industries is also making TDS default which is as on date totaling Rs.8,25,070.8.

    (iii) Key Fact: The non-filing of TDS in time is a serious corporate governance issue and IT department has taken late payment of TDS very seriously and in addition to imposing Interest and Penalty for Late Payment, they also start initiating Criminal Prosecution against those responsible for Deduction and Payment of TDS. Recently, the MD of a Hyderabad based company been jailed for TDS payment defaults

      I think, if company has dues to pay off or any issues with operations, SEBI should not approve such companies to raise money through IPO

        And especially we see such companies with poor track record comes in BSE platform as they have less stringent requirements are compared to NSE platform.

    Promoters are selling 24,50,000 Equity Shares in the following manner.
    1. Rameshbhai Bhimjibhai Patel = 8,50,000
    2. Ashaben Patel = 5,50,000
    3. Rameshbhai Bhimjibhai Patel HUF= 4,00,000
    4. Deep Additives Private Limited=2,00,000
    5.Jignesha Patel= 4,00,000
    6. Himani Patel = 50,000
    OFS in SME is like a Crime to me. OFS shows that management has very less confidence in the company that it will outperform in future else nobody has sold their shares so cheaply to the public.

    The global masterbatch market is expected to reach an estimated $10.9 billion by 2022 and it is forecast to grow at a CAGR of 4.2% from 2017 to 2022. The major driver for the growth of this market is increasing demand for plastic as substitutes for various materials like metal, concrete, and steel in various end-use industries.

    Deep Polymers is engaged in the manufacturing of different colored masterbatches. These masterbatches are used to color plastics. Let us see why industry prefers masterbatches over any other method for coloring plastics.

    1. It is extremely cost-effective. They color the polymers and also helps the plastic manufacturing companies to save a good amount.

    2. Easy to use, masterbatches ensure a dirt-free and healthy production eliminating the health risk that is involved in using powder pigments.

    3. The amount of waste produced is minimized when using masterbatches for production.

    4. Unlike using powder pigments, masterbatches have no trial and error method and can easily achieve the desired color with complete safety.