Mumbai-based Prasol Chemicals Limited, amongst the leading forward integrated manufacturers of acetone derivatives and phosphorus derivatives in India, has filed a draft red herring prospectus (DRHP) for an initial public offering (IPO) with the market regulator SEBI.
The initial share sale with a face value of Rs 2 per equity share comprises fresh issue of equity shares aggregating up to Rs 250 crore and an offer-for-sale (OFS) of up to 9,000,000 equity shares by existing shareholders. The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders.
As per market sources, the company is likely to raise around Rs 700-800 crore.
The company, in consultation with the lead bankers to the issue may consider a further issue of equity shares aggregating up to Rs 50 crore. If such placement is completed, the fresh issue size will be reduced.
The proceeds from the fresh issue will be utilised to the tune of Rs 160 crore for repayment or prepayment, in full or part of certain borrowings of the company, Rs 30 cr for working capital requirements and for general corporate purposes.
Since its inception, Prasol Chemicals has expanded its business and scope of operations, evolving from a small-scale manufacturer to a big diversified specialty chemical company with a global presence. The Government of India accredited Two Star Export House Company has a global distribution network spanning 45 countries across Asia, North America, and the European Union.
Several acetone and phosphorus derivatives included its portfolio are used in pharmaceuticals, synthesis of agrochemical active ingredients (technicals) and formulations, besides its application as a critical raw material in home and personal care products such as sunscreens, shampoos, flavors, fragrances and disinfectants. Company also has products in its performance chemical used mainly in specialty coatings, inks, antioxidants, anticorrosion and antiwear agents. There are significant entry barriers to this business and most of the competitors are multinational companies such as SI Group, Solvay, Evonik, Arkema and ALTIVIA, locally it faces little competition due to the limited presence of acetone derivative manufacturers.
As of December 31, 2021, the had a portfolio of more than 140 products and a pipeline of 32 products under development. In the last three fiscals and nine months period it has launched 38 products. Company plans to expand their production capacities, diversify product offerings, increase focus on R&D and also focus on import substitution as well as increasing exports.
Prasol has established relationships with clients such as PI Industries Limited, Bayer CropScience Limited, Solvay Specialities India Private Limited, Proctor & Gamble, Dr. Reddy's Laboratories Limited, Alembic Pharmaceuticals Limited, Coromandel International Limited, Arkema, Lubrizol India Private Limited, UPL Limited, Olon Active Pharmaceutical Ingredients India Private Limited, MSN Laboratories Private Limited, Oriental Aromatics Limited, Asian Paints Limited and others through decades of association, collaborative efforts through research and development of new and customised additives, and by undertaking synergetic business opportunities and from industry experience.
The company clocked a profit of Rs 50.10 crore in the nine-month period ended December 2021 against Rs 25.08 crore and Rs 37.77 crore in FY21 and FY 20 respectively, which were impacted by Covid-19, whereas revenue from operations was Rs 626.93 crore for the nine month period ended Dec 2021 against Rs 595.54 crore in fiscal 2021 and Rs 531.24 crore in fiscal 2020. As on Dec 2021, Export sales contribute 21.24% of its revenues and Top 10 clients contribute 17.78%.
The Indian chemicals sector accounts for about 3% of the worldwide chemicals market. It is currently ranked sixth in the world and fourth in Asia. In addition, the country ranks eighth in worldwide chemical exports (excluding pharmaceutical items) and seventh in global chemical imports (excluding pharmaceutical products). Due to increased demand from end-user sectors, as well as constrained global supply due to China's strict environmental regulations, India's specialty chemicals industry is predicted to grow at a 10-12 percent CAGR between 2021 and 2026.
JM Financial Limited and DAM Capital Advisors Limited are the book-running lead managers and Kfin Technologies is the registrar to the offer.