Chemplast Sanmar Ltd has fixed the price band for its initial public offering between Rs 530 and Rs 541 per share. Earlier, the chemical company said its IPO will open on 10 August and close on 12 August.
Chemplast Sanmar''s IPO, backed by Canadian billionaire Prem Watsa, will raise Rs 3,850 crore.
The offer consists of a fresh issue of Rs 1,300 crore and an offer for sale (OFS) of Rs 2,550 crore by its current promoters and shareholders.
The OFS comprises sale of Rs 2,463.44 crore by Sanmar Holdings, Rs 86.56 crore by Sanmar Engineering Services Ltd
The company is a part of the Chennai-based industrial conglomerate Sanmar Group, which has interests in chemicals, shipping, and engineering. It manufactures paste PVC, chloro-chemicals, caustic soda, hydrogen peroxide, and refrigerant gases, and also has a contract manufacturing segment.
The proceeds from the issue will be used for an early redemption of non-convertible debentures worth Rs 1,238.25 crore
Rating firm Brickworks has revised its rating on the company to negative from stable due to weaker than expected earnings in FY20 amid higher interest outgoes. The rating firm noted that “Until six months FY20(audited), the gearing and debt metrics were comfortable in view of the low level of debt. However, FY20 onwards, these were being impacted because of the additional debt by way of NCDs raised in December 2019 and higher coupon payments. The debt-equity ratio increased to 1.42 times for FY20 (0.18 times as on 31 March 2019).
The interest service coverage ratio (ISCR) and debt service coverage ratio (DSCR) declined to 3.35 times and 1.76 times, respectively, for FY20, against 6.88 times and 2.58 times, respectively, for FY19.
The NCDs of Rs 1,270 crore were issued by the company in multiple tranches in December 2019 at a coupon of 17.50% per annum payable monthly and have a scheduled tenor of up to seven years from the deemed date of allotment.
"The early redemption of the NCDs in full will help reduce our outstanding indebtedness and debt servicing costs, assist us in maintaining a favorable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion", the company said in a DRHP.
"In addition, we believe that our improved leverage ratio, consequent to such redemption of NCDs, will improve our ability to raise debt in the future to fund potential business development opportunities and plans", the company added.
For fiscal year 2020, the company posted a total income of Rs 1,265.51 crore against Rs 1,266.77 crore last year. Net profit for the period stood at Rs 46.13 crore versus Rs 118.46 crore a year ago. As of December 2020, its net debt stood at Rs 1,187.58 crore.
75% of the net issue is reserved for qualified institutional buyers (QIBs), whereas 15% stake will be allotted to non-institutional investors and 10% to retail investors. Investors can bid for a minimum of 27 equity shares and in multiple of 27 equity shares thereafter.
Chemplast Sanmar is a leading specialty chemicals manufacturer with focus on specialty paste PVC (polyvinyl chloride) resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.
The company was delisted nearly a decade from the stock exchanges. It was delisted from BSE, NSE and MSE with effect from June 25, 2012, June 18, 2012 and June 25, 2012, respectively.
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