Tolins Tyres IPO News: Muted Debut On The Bourses For Tolins Tyres
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00:00We also have the management of Tollens who joins in, remember they just listed on the
00:05exchanges a few minutes ago and our Sankar Krishnan, whole time director of Tollens Tyres
00:12joins in.
00:13Hi Mr. Sankar Krishnan, congratulations, it's been a fantastic listing, well done.
00:19Just a quick update on, tell us a little bit more about the company, what is the outlook,
00:24where are you going to use the funds.
00:25I know we've talked about this already when you were filing for your DRHP and of course
00:30opening the IPO, but just for the sake of new investors joining in.
00:39Thank you so much for having us on the show and thank you, extraordinary support to Indy
00:44TV for, you've been backing us from the DRHP days and right through the interviews during
00:50the roadshows and also on the successful launch of our IPO for about 230 crores.
00:55200 crores was primarily going into the company and about 30 crores forming part of the OFS.
01:00I would like to wholeheartedly take this platform to express my gratitude for 55,631 new family
01:08members in the form of stakeholders of the company and it is our job to ensure that we
01:15create wealth for them with our sustained and consistent performance.
01:20The pillars for which is already ready and there are three pillars I would probably put
01:24as the basic issues with regard to which the businesses will grow, especially in a tyre
01:30industry like ours.
01:32The first pillar being the capacity expansion and the install capacity being put at a level
01:38by which three to four years we don't need any capex to take care, which is what we had
01:42taken care of by 2023.
01:45The second pillar is going to be the augmenting the working capital management in time and
01:50the successfulness of the IPO will ensure that we have enough money and resources at
01:56our disposal, that the second pillar of working capital management is beautifully taken care.
02:01The third thing would be the technology, the innovation and the process of cost efficiency
02:07that we bring into our operation by bringing in two wholly owned subsidiaries, one in India
02:12as well as in one in Russell came on in UAE.
02:14We have ensured that all the three pillars have been kept in place.
02:192024 saw a very huge stride in terms of our revenue as well as in the EBITDA and PAC.
02:25I am extremely confident that with our plans to increase the capacity utilisation and also
02:31penetrate newer markets, we will be keeping pace with the same level of growth in the
02:36futuristic years as well.
02:37The opportunity is huge.
02:39Post COVID, there has been a huge aggression and demand in favour of the suppliers and
02:45even the cost dynamics of raw material is being passed on, which is a very good sign.
02:51And the positioning that Tallin Tyres has taken, I think it's all augmenting extremely
02:56well both from the employees, companies and the stakeholders point of view.
03:00So let's take this one at a time.
03:02You've grown quite significantly over the last couple of years with a very healthy cargo
03:07on revenue and profitability.
03:09You also have a large export market, I believe you cater to 40 countries outside India.
03:15Is this growth sustainable in the next one to two years?
03:19Will you continue to grow at 30-40% on top line and profits?
03:27So the only advantage that a small player like Tallin enjoys is the low base with which
03:32we are growing.
03:33So the next two to three years, I would comfortably see the same level of CAGR being maintained
03:38because we are growing from a low base.
03:40And for major tyre manufacturers, etc., they are already at an exceptional level.
03:45So the volume growth will be more, whereas in terms of percentage, it may not translate
03:49much.
03:50But in terms of Tallins, the lower base and an extraordinary opportunity which is there
03:55in the market because of the government policy on the Chinese tyres being banned, the lower
04:01raw material prices, the lowering of crude oil prices, the aggressive demand supply in
04:06favour of the supplier, these are all the factors that we are weighing and the kind
04:11of verticals that we are presented, especially the two wheelers and the agricultural.
04:15That is where industry research and reports are saying that the maximum prediction in
04:20terms of growth is expected.
04:22Sir, I completely understand.
04:24You have a low base and hence the growth can be much higher until, of course, it reaches
04:29a base where growing at 30-40% may be tougher.
04:32That's on your top line.
04:34That's an advantage.
04:35But the disadvantage of being a small play in an industry which has legacy players, be
04:40it an MRF, Apollo, JK, who already dominate the marketplace, and you are also in an industry
04:46where raw material prices are extremely volatile.
04:49You may not have the ability to pass that on to your consumer as well.
04:53Can you tell me what have you done to hedge yourself on that and the margin outlook for
04:59Tollins in the next couple of quarters?
05:02Traditionally, in terms of the protection of risk mitigating, the margins, etc., and
05:11the volatility of natural rubber prices, traditionally for the last five years, Tollins has followed
05:16a policy of stocking up excessive inventories during the month of March, utilising all the
05:22cash flow and the resources and the working capital limits in place with the banking system.
05:27Because from May to September onwards, the tapping of natural rubber does not take place,
05:34and we are 30-40 kilometres proximity to the maximum natural rubber production in the country.
05:40And because of this risk mitigated policy of excess stocking, we have always insulated
05:45ourselves because of the artificial increase in prices during May to September, and post-September
05:50it always comes off tampering down.
05:53So in terms of profiling, in the last four months, five months of raw material prices
05:58being very volatile and going up, the industry per se, all the major tyre manufacturers have
06:03been able to pass on that because of the demand, and also ensure a higher realisation, thus
06:09protecting the margins.
06:10In fact, some of the major tyre manufacturers, you would have observed that the pack level
06:15margins have actually improved by about 100 to 150 basis points.
06:19So we see a similar trend as far as tolling tyres also is concerned, and the risk mitigation
06:23policy that we have followed with regard to excess stocking for March has always worked
06:27in our favour for the last five years.
06:29Given the current trend, given the current demand in the marketplace, I think we are
06:34good to go for the next two to three years in terms of passing on any adverse or dynamic
06:39changes that may come up in the natural rubber prices, and we do because of the close proximity
06:44and to the family connections that Dr. Tallin enjoys with the raw material suppliers.
06:49We do enjoy a special privilege and in order to have the advantage as an exclusive player,
06:56very closer to the market.
06:57Which raw material manufacturers are these, sir?
07:05They are the plantation owners, natural rubber manufacturers.
07:08Okay.
07:0972% of your...
07:1170% of the production comes from...
07:13Yes, sir.
07:14Yeah, please go ahead.
07:16I said 72% of your revenue comes from distributors and OEMs, and from what I understand, you
07:24do not have any exclusive contract with some of your key clients.
07:29Would you work towards, you know, now that you are a listed entity and there is requirement
07:35in terms to see dependability or stability going ahead, would you look to forging exclusive
07:41contracts with the top five, ten clients of yours?
07:45Because I think that would be important for the market to see.
07:48See, right now we are 75% into thread rubber, which is for the replacement market, and 25%
07:58of our revenue comes in from tires.
08:00In tire category, we are working with OEMs like VST Tillers, Kirloskers and Camco, etc.,
08:09which forms part of about 5.38% of our revenue comes in from OEM sales on agricultural tires.
08:15With regard to the capacity expansion that has happened, definitely there are plans in
08:20terms of, you know, getting the concentration on the retail network down from 74%, closer
08:28to about 60%, and increasing the OEM sales on the rest of the products that we are catering
08:33to like LCVR, two wheelers, etc.
08:36There is an effort which is clearly on, and at the appropriate time, I think we will make
08:41the right announcement with regard to these plans, etc., but we are very much a work in
08:45progress on those areas.
08:47Now, with regard to the thread rubber market, we are about 75%, as I told you, the revenues
08:53come from thread rubber market, and this is a growing market because for large fleet owners,
08:58it's a very cost effective with the same amount of advantage of a new tire is the kind
09:02of quality that we have been able to give to the marketplace.
09:05So we are continuing to grow the thread rubber market while we are penetrating markets with
09:09regard to the two wheeler, LCV and the agricultural tires market.
09:13Right.
09:14Once again, congratulations, sir.
09:17It's fantastic and I'm guessing very heartening to see your company list on the exchanges.
09:22We'll hopefully see you in a quarter when you report your earnings, but until then,
09:25good luck and see you soon.
09:28Thank you so much, Ma'am, and I want to take this platform to thank all the regulators
09:32across SEBI to BSE to NSE to the media and ROC and MCA, everybody who has supported us
09:39in a very short span of about a year's time.
09:42The whole journey has come into a listing plate.
09:44Given the current environmental listing, etc., I think it has been a fabulous timeline that
09:49we have been able to maintain, and an exclusive special thanks to NDTV Profit to have carried
09:54talents on your shoulders through this entire journey.
09:57A special thanks to all of you.
09:58It's a pleasure and it's uncharted territories from here on.
10:02So good luck and I'm hoping you success as you go ahead.