Uma Convertor IPO - 7 things to know

Uma Convertor Ltd, a flexible packaging material company, filed its draft red herring prospectus (DRHP) in June 2021. As of date, the SEBI approval, which comes in the form of observations, is yet to come in.

The company can decide on the timing and game plan for the IPO only after the actual approval from SEBI comes in.

Normally, in case SEBI does not have any queries or does not seek any specific clarifications, then the approval is given between 2 months and 3 months from the date of the filing of the DRHP. However, in this case, the approval is still awaited.

7 important things to know about the Uma Convertor Ltd IPO

1) Uma Convertor Ltd has filed for an IPO with SEBI which comprises entirely of a fresh issue of Rs.36 crore. There is no offer for sale or OFS of shares in this IPO. However, since the price band for the stock has not been fixed, the size of the Uma Convertor IPO is not known in terms of number of shares.

2) The net proceeds of the fresh issue of Rs.36 crore will be utilised towards the proposed expansion of the business of Uma Convertor Ltd. This includes y upgrading its manufacturing facility situated at Timba in the state of Gujarat as well as for repayment or prepayment of unsecured loans in its balance sheet.

3) Uma Converter has a 23 year pedigree in the business and had commenced its business operations back in 1999. The company is into manufacturing flexible packaging material.

Currently, Uma Convertor has 2 manufacturing facilities with a combined capacity of 1,800 metric tons per annum. Post-Issue the company plans to increase the capacity of one of its manufacturing facilities to 9,000 MTPA (metric tonnes per annum). 
 

4) Currently, Uma Convertor has a widespread domestic presence spread across 17 Indian states. In addition, Uma Convertor also exports finished products to countries including Saudi Arabia, Australia, Senegal and the United States of America.

5) The flexible packaging material industry that Uma convertor operates in, currently is in a sweet spot. It is among the fastest-growing packaging segments in India, as these types of packaging are multi-functional and caters to the packaging requirements of various industries.

Uma Convertor has an integrated business model covering the entire value chain in flexible packaging. It is engaged in developing, devising appropriate packaging material, package design customised to the nature of the product as well as actual manufacturing of the final finished packaging material. This integrated value chain gives the company better control over costs and the supply chain.

6) Uma Convertor has some advantages like the integrated model explained above, long standing and deep relationships with customers across the globe, as well as a focus on R&D, which gives them much better credibility in the flexible packaging market.

However, there are some risks too. In terms of size, it is still too small and that can be a bottleneck in growth. The company is too dependent on the food and beverages industry, which makes its model cyclical and vulnerable. With narrowing margins in the FMCG space, input companies are likely to also face price pressure. 

7) The IPO of Uma Convertor Ltd will be lead managed by GYR Capital Advisors. They will act as the sole book running lead managers or BRLMs to the issue. The stock will be listed on the BSE and the NSE.

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