Aten Papers & Foam Ltd. IPO: Key Details

Aten Papers & Foam

• Aten Papers & Foam is coming out with an initial public offering (IPO) of 33,00,000 equity shares in a price band Rs 91-96 per equity share.
• The issue will open on June 13, 2025 and will close on June 17, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 9.10 times of its face value on the lower side and 9.60 times on the higher side.
• Book running lead manager to the issue is Swastika Investmart.
• Compliance Officer for the issue is Neha Munot.

Profile of the company

Aten Papers & Foam operates as an important intermediary in the Paper Product Supply Chain. As a crucial middleman in the paper product supply chain, the company procures paper from different paper mills and resell them to clients in the packaging products industry. Examples of these products include Kraft Paper and Duplex Board. It also purchases Wastepaper from stockiest and sell them to Paper mills which is crucial raw material for such mills. A wide range of grades, thicknesses, widths, and standards are available in its product portfolio for Kraft papers and Duplex boards and other according to customer specifications.

It operates from its Registered Office and also operates Godown located in Changodar, Ahmedabad. The paper products manufactured by its customers have a variety of end use applications and are used mainly in the packaging industry. It sells papers in the domestic markets specially in the state of Gujarat.

It attributes its growth to the expertise and dedication of its management team. Their extensive experience of more than two decades, they play a pivotal role in guiding its strategic decisions and daily operations. Its Promoters, Mohamedarif Mohamedibrahim Lakhani and Amrin Lakhani, with their deep knowledge, vision, and industry insight, have been instrumental in shaping and executing its growth strategies. Their leadership has allowed it to adapt to evolving market demands and successfully expand its business.

Proceed is being used for:

• Capital expenditure
• Meeting working capital requirements
• General corporate purposes

Industry Overview

The India Paper and Paperboard Packaging Market size is estimated at $13.72 billion in 2025, and is expected to reach $18.92 billion by 2030, growing at a CAGR of 6.63% during the forecast period (2025-2030). The Indian paper and packaging industry has witnessed significant transformation driven by changing consumer preferences and technological advancements. With India's overall size of the packaging industry market in India valued at over $70 billion in 2023, paper packaging has emerged as a crucial segment gaining prominence across various sectors. The industry's structure is characterized by around 600 paper mills, with twelve major players dominating the market landscape. Despite the growing market, India's per capita paper consumption remains relatively low at 15 kg compared to the global average of 57 kg, indicating substantial growth potential in the domestic market.

In the last five to seven years, an amount of over Rs 25,000 crore has been invested in new efficient capacities and induction of clean and green technologies. The industry size of single-use plastics is estimated to be Rs 10,000 crore. This move by the government will benefit all Indian paper mills to flourish their business. In India, only 15% of total paper and paperboard production is made from recycled materials, compared to a global average of 30% to 85%. As a result, there is a lot of potential for recycling in the paper industry.

India's paper and packaging sector has a bright future ahead of it, thanks to the nation's expanding urbanization, increased disposable income, and expanding population. The need for packaging materials is increasing due to the quick growth of e-commerce, and the industry is being forced to come up with greener solutions as sustainability becomes more and more of a priority. It is anticipated that government programs like 'Make in India' and infrastructure development projects would increase manufacturing and improve supply chains. Technological developments are improving quality and productivity, and growing export potential is creating prospects for market growth. Notwithstanding obstacles like volatile raw material costs and competition from substitute materials, the sector may seize chances and solidify its place in the international market with the support of smart investments and a dedication to sustainability. 

Pros and strengths

Variety of products: The company provides a one stop shop to its clientele for their customized paper product supply needs. As a trading company, it is in a position to always provide the latest products collected in house for its customers and also conduct market expansion activities for its suppliers. Its continuous effort and belief in maintaining a healthy relationship with its suppliers ensures adequate inventory at any point. It procures, stock and supply a diverse and multi-application range of papers and paper products to satisfy the growing requirements of customers. It procures various types of paper from Paper Mills, which are used for varied purposes including Packaging and Printing, which inter-alia includes retail mono packaging boxes and shipper carton manufacturing. 

In-house logistics: The company has its own in-house commercial vehicles which facilitates door-to-door delivery service to its customers, in order to minimise transportation costs by providing effective material handling system. It owns four commercial vehicles for this purpose. Transportation mainly includes carrying the products from the paper mills and delivering them to the customers. At times, when needed, it also outsources its transportation-to-transportation agencies.

High Credibility with its Banker and existing lines of Credit since 2019: The Paper Industry is a highly competitive and fragmented one. Small sized mills usually face cash crunch situations and are willing to give discounts to buyers who are willing to purchase products on cash basis. Similarly, the end-users of this Industry require high amount of credit. Hence, it plays an important role here as a financial intermediary by assisting such mills by giving them a bailout and providing its products to the end users on credit. It has maintained an efficient liquidity and net worth position. Currently it obtained a credit facility of Rs 900 lakh from its bankers.

Risks and concerns

Maximum revenue comes from limited customers: The company’s top ten customers contribute 30.51%, 34.62%, 28.00% and 28.20% of its total sales for the year ended on March 31, 2025, March 31, 2024, March 31, 2023 and March 31, 2022 respectively. Moreover, 8.14%, 17.04%, 11.30% and 10.54% of its total revenue is from related parties / group companies /entities. All transactions with related parties entered into by the Company in past were at arm’s length basis, in compliance with applicable provisions of Companies Act, 2013. The company is engaged in the business of paper trading. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.

Geographical constrain: For the year ended March 31, 2025, March 31, 2024, March 31, 2023 and March 31, 2022 sales within the state of Gujarat was 98.16%, 99.18%, 99.86% and 99.59% respectively of its total revenue from operations. It anticipates continuing to expand its sales efforts in this region. However, this high concentration in Gujarat exposes it to increased competition, as existing and potential competitors may intensify their focus on this market to capture a larger share. This heightened competition, along with other adverse developments such as economic, political, or demographic changes, could significantly impact its market share and overall business performance. Consequently, any negative event affecting its sales in Gujarat could materially harm its business prospects, financial condition, and operational results. While it aims to mitigate these risks, the concentration of its operations in Gujarat makes it particularly vulnerable to these external factors.

Dependent on a few suppliers for purchase of product: The company’s top ten suppliers contribute 72.40%, 84.46%, 84.12% and 89.92% of its total purchases for the year ended on March 31, 2025, March 31, 2024, March 31, 2023 and March 31, 2022 respectively. Moreover, 19.21%, 56.74%, 30.85% and 35.49% of its total purchase is from related parties / group companies /entities. It cannot assure that it will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations.

Outlook

Aten Papers & Foam is operating as a key intermediary in the paper product supply chain. The company sources paper from various mills and supplies it to clients in the packaging industry. The company has High Credibility with the Banker and existing lines of Credit since 2019. On the concern side, the company is dependent on a few suppliers for purchase of product. Loss of any of these large suppliers may affect its business operations. Moreover, significant revenue of the company is from related party. Moreover, the company has a significant sale generated from state of Gujarat and any adverse developments affecting its operations in this state could have an adverse development affecting its operation in this state could have an adverse impact on its revenue and results of operation.

The company is coming out with a maiden IPO of 33,00,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 91-96 per equity share. The aggregate size of the offer is around Rs 30.03 crore to Rs 31.68 crore based on lower and upper price band respectively. On performance front, the company’s total revenue from operations for the year ended on FY 2024-25 was Rs 13,869.22 lakh as compared to Rs 9,679.82 lakh during the FY 2023-24. Moreover, PAT Increased to Rs 701.14 lakh in FY 2024-25 from Rs 278.10 lakh in the FY 2023-24. PAT was 5.06% and 2.87% of total revenue of the company for the year ended on March 31, 2025 and March 31, 2024 respectively.

The company, currently engaged in the paper trading business, is excited to announce its plans to expand operations by setting up wastepaper processing units. This strategic move will mark its entry into wastepaper processing, which will serve as a key raw material supply for its trading activities. It plans to invest around Rs 425.00 lakh to purchase requisite machineries for setting up waste paper processing Units. These units will enhance its supply chain efficiency and sustainability by providing a reliable source of processed wastepaper. A portion of the proceeds from the issue will be allocated to this project, facilitating the successful implementation of these wastepaper processing units and supporting its business expansion goals.