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Diffusion Engineers refiles DRHP with SEBI for IPO

Posted On: 2024-04-30 08:34:33 (Time Zone: IST)

Nagpur-based Diffusion Engineers Ltd, engaged in the business of providing engineering solutions to customers both in domestic and international markets has refiled its draft red herring prospectus (DRHP) with capital market regulator Securities and Exchange Board of India (SEBI) to mop up funds through an initial public offering (IPO).

The IPO with a face value of ?10 each is a complete fresh issuance of 9.85 million equity shares. The offer also includes a reservation for a subscription by eligible employees and a discount is being offered to eligible employees bidding in the employee reservation portion.

According to market sources, the issue would be in the range of Rs 125-150 crore.

Earlier, the company had filed draft papers with the SEBI in December 2023 for IPO.

The Issue is being made through the Book Building Process, wherein not more than 50% of the Issue shall be available for allocation on a proportionate basis to Qualified Institutional Buyers, not less than 15% of the Issue shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation to Retail Individual Bidders.

The company intends to utilize about ?71.38 crore for funding capital expenditure requirements towards the proposed expansion of its existing manufacturing facility, Rs 30.38 crore for setting up a new manufacturing facility at Hingna, Sonegaon District, Nagpur, Rs 22 crore for funding working capital requirements of the Company and general corporate purposes.

Diffusion Engineers was established in 1982 under the leadership of Prashant Garg, who serves as the Managing Director. Initially, the company focused on trading welding electrodes for Super-conditioning. Over its more than forty years in operation, it has diversified its offerings, encompassing a broad spectrum of products and services. These include the production of specialized welding consumables, wear plates, and heavy engineering equipment for essential industries. The company also specializes in tailored repairs and reconditioning services for heavy machinery and equipment.

In addition to its core offerings, Diffusion Engineers is engaged in the trade of anti-wear powders, welding, and cutting machinery. One of its key services is the super conditioning process conducted at its manufacturing facilities. This process offers a surface treatment solution for machine components, significantly enhancing wear resistance, alleviating stress, and improving repair capabilities. Consequently, this leads to extended lifespans for industrial parts, fostering smoother functionality, and reducing production costs.

The company has established a seamless forward integration system. This involves the manufacture of special-purpose electrodes and flux-cored wires, which are utilized in creating wear-resistant plates (commonly known as wear plates). These plates are essential components in the manufacturing of a majority of large industrial equipment within its heavy engineering division. They significantly contribute to the production of industrial equipment for core sectors such as Cement, Steel, Power, Mining, Engineering, Oil & Gas, and Sugar. This integration fosters efficiency in the production process, offering competitive advantages, reducing product costs, exerting control over raw material supplies, and decreasing reliance on third-party operations.

Presently, the company operates from four manufacturing units, with three located in Nagpur Industrial Area and Hingna, and the fourth in Khapri (Uma). Furthermore, it has an overseas presence through its subsidiaries in Singapore, Turkey, and the Philippines, and Joint Ventures/ Associates in the United Kingdom and Malaysia.

In the financial year 2023, the company's restated consolidated revenue from operations rose 24.58% year-on-year (YoY) to Rs 254.88 crore from Rs 204.59 crore in fiscal 2022, primarily attributed to an increase in revenue from Welding Consumables, Wear plate / Wear Parts, and from Trading activities. This increase was majorly attributed to an increase in the production mix and an increase in the volume of units sold. Profit after tax for the same period rose 29.92% from Rs 17.05 crore in fiscal 2022 to Rs 22.14 crore in Fiscal 2023.

For the nine months ended December 31, 2023, revenue from operations stood at Rs 204.20 crore, and profit after tax stood at Rs 21.62 crore.

Unistone Capital Private Limited is the sole book-running lead manager and Bigshare Services Private Limited is the registrar of the offer. The equity shares are proposed to be listed on BSE and NSE.

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