Digging deep to beat off competition

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: 20 Microns Limited launches its initial public offering on September 8, 2008. The company is offering over 43 lakh shares at a price band of Rs 50-55, hoping to raise anywhere between Rs 21.7-23.9 crore. The primary reasons for doing so, is to finance their ongoing expansion plans in various manufacturing units and to invest in sub micron particle sizes, which has market demand.

The units in Vadadla, Bhuj, Tirunelveli and Udaipur are set for expansion, with the inclusion of a technology-intensive import substitute. This should add to the value addition of the plants, as it will enable them to produce finer and purer material with a size of up to 0.7 microns. This should enable them to garner higher profitability with increased market penetration and greater volumes, also helping them beat off the competition.

The machinery required to set up these expansion plans costs approximately Rs 14.6 crore. The company has already secured a term loan from IDBI for Rs10 crore towards part financing of the project.

Business overview

20 Microns was incorporated in Gujarat in 1987, and is a manufacturer of white non-metallic minerals in India. The company manufactures micronised mineral products, including micronised ground calcium carbonate, china and calcined clay, talc, dolomite, silica, mica and whiting (calcite and calcium carbonate), which finds application in the paints, plastics, rubber, ceramic, paper and other industries as functional fillers.

They have mining resources and plants in the states of Rajasthan, Gujarat, and Tamil Nadu. Their eight manufacturing facilities located in different regions of the country ensure that they are closer to their markets enabling them to supply cheaper and more efficiently.

Another factor that works in the companies favour is their four mines of ground minerals, which ensure a constant supply of raw materials at a lower cost. While these four mines comprise of 72 hectre of mining area, this ambitious company has already sought permission for 1,000 hectre of additional mining area.

The company has a turnover of 1, 70,000 tonne per annum, in white minerals including ultra-fine minerals ranging from 20 microns to 2 microns of particle size and is planning to introduce sub-micronised grades and nano-additives. Sub-microns and nano-additives are processed non-metallic minerals used as an import substitute in various chemicals and polymers in paints, PVC pipes, paper, cement and ceramics.