GEM Enviro Management Limited IPO

Apply 0
Avoid 0

GEM Enviro Management Limited (“GEM”) was established in 2013 with a primary focus on the collection and recycling of packaging waste, including plastic waste. Over the years, GEM has diversified its services to include the implementation of Plastic Extended Producer Responsibility (EPR) Programs, making it the largest business vertical contributing 82.41% of the company’s revenue in 2022-2023.

Business Verticals

1. EPR Consultancy and Fulfillment for Plastic Waste
i. Overview: GEM offers comprehensive consultancy and fulfillment services for Plastic Waste EPR programs, helping organizations comply with the Plastic Waste Management (PWM) Rules of 2016 and its amendments.
ii. Contribution: This vertical is the major revenue driver, contributing 82.41% in the fiscal year 2022-2023.
iii. Services: Includes creating and managing EPR plans, liaising with stakeholders, and ensuring compliance with PWM regulations.

2. Collection and Recycling of Industrial Plastic Waste
i. Overview: GEM engages in the collection and recycling of industrial plastic waste, ensuring proper processing and repurposing.
ii. Contribution: Contributed 17.42% of revenue in FY 2022-2023.
iii. Services: Includes sorting, processing, and recycling plastic waste from industrial sources.

3. Sales and Marketing of Recycled Products
i. Overview: The company also markets products made from recycled plastic, promoting the use of sustainable materials.
ii. Contribution: This segment contributed 0.18% of revenue in FY 2022-2023.
iii. Services: Sales channels for recycled merchandise, promoting circular economy principles.

4. ESG Consulting and BRSR (Business Responsibility and Sustainability Reporting)
i. Overview: In FY 2023-2024, GEM expanded into Environmental, Social, and Governance (ESG) consulting and Business Responsibility and Sustainability Reporting.
ii. Services: Includes providing insights and strategies for sustainability reporting and compliance, enhancing corporate responsibility.

Additional Initiatives

i. Awareness Programs: GEM regularly organizes educational programs to raise awareness about proper disposal of plastic waste and the importance of recycling.
ii. Historical Engagement: From 2013 to 2018, GEM was involved in trading plastic waste materials and merchandise produced from recycled waste, establishing a firm foundation in sustainable plastic waste management and environmental stewardship.

Compliance and Regulatory Framework

i. PWM Rules 2016: The Ministry of Environment, Forest, and Climate Change (MoEFCC) notified the Plastic Waste Management Rules in 2016, which mandate the reduction, segregation, and proper disposal of plastic waste.
ii. EPR Guidelines 2022: The guidelines issued in February 2022 set a structured framework for EPR, defining roles and responsibilities for Producers, Importers, Brand Owners, Recyclers, Waste Processors, and other stakeholders.
iii. PIBO Responsibilities: The rules enforce Extended Producer Responsibility on Producers, Importers, and Brand Owners (collectively PIBO), covering both pre-consumer and post-consumer plastic packaging waste.

Conclusion

GEM Enviro Management Limited stands as a leading entity in plastic waste management, driven by its commitment to sustainability and regulatory compliance. With a diverse range of services, including EPR consultancy, industrial plastic waste recycling, sales of recycled products, and ESG consulting, GEM plays a crucial role in advancing environmental stewardship and sustainable business practices in India.

Objects of the GEM Enviro Management Limited IPO:

The Net Proceeds are proposed to be used in the manner :- i. To Meet Working Capital Requirements ii. General corporate purpose. Total number of share issue :- i. Fresh issue is 1,497,600 shares, ii. Offer for sale is 4,492,800 shares.
DRHP of GEM Enviro Management Limited IPO
RHP of GEM Enviro Management Limited IPO

GEM Enviro Management Limited IPO Details:

Open Date: Jun 19 2024
Close Date: Jun 21 2024
Total Shares: 5,990,400
Face Value: ₹ 5 Per Equity Share
Issue Size: 44.93 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 71 - 75 Per Equity Share
Listing At: BSE SME
Listing Date: Jun 26 2024

Promoters And Management:

Mr. Dinesh Pareekh, aged 54, brings over 30 years of corporate experience as the chairman and non-executive director of the company. He has significantly shaped the organization since its inception in 2013. He is also a promoter director at BLP Equity Research Private Limited, leveraging his extensive capital markets experience for strategic investments and business development. Committed to sustainable practices, Mr. Pareekh's expertise in recycling and waste management highlights his dedication to environmental responsibility. He is known for his innovative and pragmatic leadership in managing businesses and investments. Mr. Sachin Sharma, 47, serves as the Managing Director of the Company. With 20 years of experience and qualifications in Textiles Technology (B. Tech) and Computer-Aided Management from IIM Calcutta, he has excelled in engineering, business management, and entrepreneurship. His corporate journey, including roles at Edelweiss, led to a commitment to sustainability. In 2013, he co-founded GEM Enviro Management Limited to address the plastic waste crisis. Under his leadership, GEM has expanded operations, collaborating with businesses, governments, and communities to implement large-scale plastic waste management solutions. Mrs. Mamta Gupta, 51, is an independent director of the company with a master’s degree in HRDM from IIT Kharagpur and a master’s in Chemistry from the University of Roorkee. With 20 years of experience, she blends technical and scientific expertise. She has contributed to community development through NGO work and has taught at the college level. Currently, she is engaged in research, exploring innovative solutions to pressing challenges, exemplifying the intersection of technology, education, and social impact.

Financials of GEM Enviro Management Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
9M-FY24
Revenue from Operations 2,551 3,280 4,253 2,621
Other Income 9 11 28 18
Total Revenue 2,561 3,291 4,281 2,639
Purchases 379 240 651 76
Operating expenses 1,009 1,522 1,768 1,087
Change in Inventories 2 43 4 -1
Employees Benefit Expenses 149 185 241 201
Other Expenses 213 299 261 138
EBITDA 809 1,003 1,355 1,138
OPM (%) 31.60% 30.49% 31.66% 43.14%
Depreciation & Amortisation 30 6 5 4
EBIT 779 998 1,350 1,134
Finance Cost 0.1 0 0 0
PBT 779 998 1350 1134
Tax 195 252 348 294
PAT 583 745 1002 840
NPM (%) 22.78% 22.64% 23.40% 31.84%
No.of Shares 225.5 225.5 225.5 225.5
EPS 2.58 3.30 4.44 3.72

Comparison With Peers:

Note :- There are no listed companies in India that engage in a business similar to this Company.

Recommendation on GEM Enviro Management Limited IPO:

Review and Recommendation of GEM Enviro Management by team IZ is 5/10. 1. GEM Enviro Management Limited (GEM) is dedicated to the collection and recycling of various packaging wastes, including plastic waste. Over the years, the company has evolved to include Extended Producer Responsibility (EPR) programs, which have become its primary revenue source, accounting for 82.41% of the revenue in the fiscal year 2022-2023. GEM has diversified its services into several key areas of sustainability, offering a comprehensive suite of solutions aimed at promoting environmental stewardship. 2. Core Business Segments i. EPR Consultancy and Fulfillment for Plastic Waste :- GEM assists organizations in fulfilling their EPR obligations as per the Plastic Waste Management (PWM) Rules 2016 and its amendments. This segment is the largest business vertical of the company. ii. Collection and Recycling of Industrial Plastic Waste :- This segment involves the systematic collection and recycling of industrial plastic waste, contributing significantly to GEM's revenue. iii. Sales and Marketing of Recycled Products :- GEM engages in the sales and marketing of products made from recycled materials, promoting a circular economy. iv. ESG Consulting and BRSR :- The company offers Environmental, Social, and Governance (ESG) consulting services along with Business Responsibility and Sustainability Reporting (BRSR) to help businesses align with sustainable practices. 3. Additional Services In addition to the core business segments, GEM organizes awareness programs to educate the public on proper plastic waste disposal and the importance of recycling. 4. SWOT Analysis Strengths i. Deep understanding of the regulatory landscape for EPR. ii. Robust processes and workforce adaptable to EPR requirements. iii. Strong brand presence in the plastic EPR segment. iv. Established relationships with stakeholders in the plastic and other EPR value chains. Weaknesses i. Lack of trained manpower in the nascent waste services industry, necessitating internal training programs. ii. Heavy reliance on the domestic Indian market, exposing GEM to local market risks. Opportunities i. Rapidly growing EPR market. ii. Expanding market size for GEM's other business segments. iii. Potential for high growth in the waste tech/enviro tech industry through technologies like AI and Blockchain. Threats i. Increasing competition in the EPR segment due to low entry barriers. ii. Frequent regulatory changes by the Central Pollution Control Board (CPCB). iii. Potential pricing pressures from recyclers. iv. Possible future licensing requirements by SEBI for conducting ESG audits. 5. Industry Competition Analysis The plastic EPR service provider industry is highly competitive, driven by regulatory changes, technological advancements, and strategic collaborations. Success in this sector hinges on the ability to provide sustainable and efficient solutions, with key competitive factors including service quality, reliability, and price. 6. The Revenue has Increased from Rs.25 Crores in FY21 to Rs.42 Crores in FY23. 7. The EBITDA has Increased from 8 Crores in FY21 to 13 Crores in FY23. 8. The PAT has Increased from 5 Crores in FY21 to 10 Crores in FY23. 9. As per FY23, CFO/EBITDA is 0.97, As per FY24, EPS is 4.96, 10. Market Capitalization is 169 Crores & P/E is 15.09x based on FY24.

Lead Manager of GEM Enviro Management Limited IPO:

  1. Fintellectual Corporate Advisors Private Limited
  2. Share India Capital Services Private Limited

Registrar of GEM Enviro Management Limited IPO:

  1. Skyline Financial Services Private Ltd

Company Address:

GEM Enviro Management Limited Unit No.203, Plaza- P 3 Central Square, Bara Hindu Rao, -New Delhi-110006 Phone: 011-49068377 Email: vijay.sharma@gemrecycling.com Website: http://www.gemrecycling.com/

Discussion on GEM Enviro Management Limited IPO:

Leave a Reply