Tolins offers quality at a discount, but raw material prices weigh
ET Intelligence Group: Tolins Tyres, a manufacturer of tread rubber and tyres, is aiming to raise ₹230 crore through an initial public offering. The IPO will consist of a fresh issue of shares worth ₹200 crore, which will be used for loan repayment and to enhance working capital, while the rest will come from an offer for sale by its promoters.
The company's go-to-market strategy involves utilising dealers and distributors (B2C), focusing on fleet operators by offering quality comparable with leading tyre brands at a significant discount. In contrast, its competitors have concentrated on state transportation businesses (B2G), compressing net margins.
Tolins Tyres operates a plant in the UAE — the only tread rubber plant in the region — which gives it a broad overseas market. The company is entitled to issue recycle certificates for tyres, which would be an incremental income with no expense. Given these factors, long-term investors may find the company's IPO appealing.
Business Model: Tolins Tyres, established in 2003, is a leading manufacturer of tread rubber — a cost-effective alternative to new tyres — with approximately 1,003 stock-keeping units (SKUs). The company produces a wide range of tyres for light commercial vehicles, motorcycles, three-wheelers, and off-road vehicles. It operates three plants — two in Kerala and one in the UAE — with a combined capacity of 1.51 million tyres and 12,486 tonnes of tread rubber. About 75% of revenue comes from tread rubber and the rest from tyres.
Financials: From
