Home / RPTs / DP FAITH INDUSTRIES LIMITED

DP FAITH INDUSTRIES LIMITED

DP Faith Industries Limited - Related Party Transactions

Introduction

Based on the DRHP (Draft Red Herring Prospectus) dated August 04, 2026, and subsequent filings, here are the “Related Party Transactions” (RPT) details of DP Faith Industries Limited.

Business Model Operations

Business Model: Faith Industries operates on a B2B model, supplying PVC and CPVC additives to industrial processors. Following a fire incident at its Santej facility in May 2026, it currently operates under a supervised job work manufacturing model, supplying raw materials and formulations to third-party workers while maintaining control over quality and dispatch.


Customer Advances: The company received advances from customers totaling ₹357.38 lakhs in FY26, ₹362.63 lakhs in FY25, and ₹385.40 lakhs in FY24.


Comparable Peers: Key listed peers include Platinum Industries Ltd, POCL Enterprises Ltd, and Fine Organic Industries Limited.


Raw Materials: Primary materials include stearic acid, litharge, polyethylene waxes, Titanium Dioxide, and chlorinated polyethylene.


Sourcing Mix: Materials are sourced both domestically and through imports. In FY26, 87.87% (₹9,670.55 lakhs) were domestic purchases (mostly from Gujarat), and 12.13% (₹1,334.98 lakhs) were imports, majorly from China.


Price Volatility: Raw material price volatility is rated as a "High" impact risk for the next 1-4 years.


Raw Material Vendors: The company is dependent on a limited number of suppliers, with the top 10 vendors accounting for 76.94% of purchases in FY26.


Key Business Factors: Demand is driven by industrial growth, infrastructure, and real estate activity, particularly in end-use sectors like PVC pipes, tubes, profiles, and cables.


Regulatory & Competitive Landscape: The landscape is highly competitive with both organized and unorganized players. Regulators are phasing out lead-based stabilizers in favor of non-lead alternatives like Calcium-Zinc.


Total Addressable Market (TAM): The domestic chemicals market in India was valued at approximately USD 220 billion in 2023.


Revenue Mix (Domestic vs. Export): In FY26, 82.27% was domestic and 17.73% was from exports. In FY25, the mix was 75.29% domestic and 24.71% exports.

Financial Performance Health

Sales, EBITDA, and PAT Trends (Increasing):

  1. Sales: ₹12,989.71L (FY26) vs ₹9,252.10L (FY24).
  2. EBITDA: ₹1,855.92L (FY26) vs ₹737.65L (FY24).
  3. PAT: ₹1,114.70L (FY26) vs ₹243.58L (FY24).


Margins: Both EBITDA (14.29% in FY26) and PAT margins (8.58% in FY26) have shown a consistent upward trend since FY24.


Reason for Increase: FY25 growth was supported by material cost efficiency. FY26 growth was driven by higher business volumes, improved operating leverage, and lower proportional finance and depreciation costs.


Balance Sheet Health: Net worth increased to ₹3,240.80 lakhs in FY26. The current ratio improved from 1.02 (FY24) to 1.65 (FY26), and the debt-equity ratio improved from 2.18 (FY24) to 1.14 (FY26).


Operating Cashflows: Net cash from operating activities was ₹262.79 lakhs in FY26, ₹297.50 lakhs in FY25, and ₹383.95 lakhs in FY24.


Total Debt (3 Years): Total debt stood at ₹3,694.59 lakhs (FY26), ₹4,115.48 lakhs (FY25), and ₹3,781.42 lakhs (FY24).


CapEx (3 Years): Total expenditure on PPE was ₹224.25 lakhs (FY26), ₹190.77 lakhs (FY25), and ₹208.49 lakhs (FY24).


Return on Capital (ROCE): ROCE was 26.28% in FY26, compared to 13.31% in FY24.


Asset Turnover: The net fixed asset turnover ratio was 9.10 in FY26, compared to 7.90 in FY24.


Cashflow:

Based on these figures, both Free Cash Flow and the EBITDA to CFO conversion % are decreasing.

Risks Management Outlook

Key Risks:

  1. Disruption at the Santej manufacturing facility due to fire and the resulting dependence on third-party job workers.
  2. Customer concentration: Top 10 customers account for 58.58% of revenue.
  3. Geographic concentration: Over 46% of revenue is derived from Gujarat.
  4. Raw material supply risks due to a lack of long-term contracts.


Legal Cases:

  1. Against Company: 12 TDS-related tax proceedings (₹2.04 lakhs) and one material civil suit for recovery (₹23.76 lakhs).
  2. Against Promoters: One tax demand of ₹5,780 against Karan Kankariya.


Red Flags:

  1. Decreasing conversion of EBITDA to operating cash flow and decreasing Free Cash Flow.
  2. Untraceable historical corporate records and inadvertent errors in RoC filings.
  3. History of delayed filings for statutory dues like EPF and ESIC.


Debtors Age Analysis (FY26):

  1. Undisputed: ₹1,678.23 lakhs are less than 180 days old; ₹7.94 lakhs are over 3 years old.
  2. Disputed: ₹156.45 lakhs total, with ₹112.15 lakhs aged 1-2 years.


Management Commentary on Trends: Management identifies a structural industry shift toward non-lead-based and organic stabilizers. The broader industry outlook suggests sustained long-term growth driven by domestic consumption and global supply chain diversification (e.g., China plus one).


Growth Plans: Priorities include repaying debt (₹2,450 lakhs from IPO proceeds), restoring the Santej facility, expanding the distribution network, and innovating new product formulations.

Disclaimer

This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. Recipients may not receive this report at the same time as other recipients. The information contained herein is from the public domain or sources are believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Opinions expressed are current opinions as of the date appearing on this material only. While we endeavour to update on a reasonable basis, the information discussed in this material, Mr Avinash Gorakshakar is under no obligation to update or keep the information current. Further there may be regulatory, compliance, or other reasons that prevent me from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Avinash Gorakshakar and any person connected with it, will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behaviour of investors or recipients or provide any investment/tax advice. This report is for information only and has not been prepared based on specific investment objectives. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Trading in stocks, stock derivatives, and other securities is inherently risky and the recipient agrees to assume complete and full responsibility for the outcomes of all trading decisions that the recipient makes, including but not limited to loss of capital. Opinions, projections and estimates in this report solely constitute the current judgment of the author of this report as of the date of this report and do not in any way reflect the views of Avinash Gorakshakar. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

SEBI REGN NO. INH000001071