Rossari Biotech IPO Analysis (Apply)

• IPO Details
• Stock Price
• Docs
  • RHP
  • DRHP
• Reviews
• Subscription
• News
• GMP
• Allotment
• BoA
• Messages

Review By Chittorgarh.com Team on July 8, 2020

Company Background

• Rossari Biotech Limited (RBL) was incorporated as a partnership firm on 6th March 2003 as 'Rossari Labtech'. Thereafter in December 2003, the firm name was changed to 'Rossari Biotech' and in August 2009 , the partnership firm was converted to a joint stock company under the name of 'Rossari Biotech Limited'.
• RBL is in the business of providing home, personal care and performance chemicals; textile specialty chemicals; and animal health and nutrition products.
• Based on the sales for Fiscal 2019, RBL is one of the leading specialty chemicals manufacturing companies in India providing customized solutions to specific industrial and production requirements primarily in the FMCG, apparel, poultry and animal feed industries.
• RBL operates in 18 countries including India along with other foreign countries viz. Vietnam, Bangladesh and Mauritius.
• As per the F&S report as of 30th September 2019, RBL is the largest manufacturer of textile specialty chemicals in India.
• The majority of products are manufactured in-house at Silvassa in the Union Territory of Dadra & Nagar Haveli with an annual capacity utilization ranging from 74% to 94%. The company is in process of setting up another manufacturing facility at Dahej in Gujarat with a proposed installed capacity of 132,500 MTPA which will enjoy proximity to the deep-water, multi-cargo port of Dahej and is expected to start operations in Fiscal 2021.
• RBL has two R&D facilities - one within the Silvassa Manufacturing Facility and another one in Mumbai which are recognized and certified by the Department of Scientific and Industrial Research, Government of India and are various other organizations including the Global Organic Textile Standards and the American National Standards Institute.

Speciality Chemical Industry Overview

• The speciality chemical industry has immense scope of growth globally as well locally. The global speciality chemical industry is expected to growth at a CAGR of 5.3% and the Indian speciality checmial industry is expected to grow at a CAGR of 12%. The Asia Pacific countries are expected to grow in the range of 6-7%.
• There is major shift towards 'green' chemicals that are bio-degradable and environment friendly. The global green chemicals market is expected to grow at a CAGR of 10.5% during 2019-2023.
• The Indian specialty chemicals industry is driven by both domestic consumption and exports. Further fur to tightening of environmental norms in developed countries, the slowdown of China and the recently launched 'Make in India' campaign is expected to add impetus to the emergence of India as a manufacturing hub for the chemicals industry in the medium term.

Company Strengths

• RBL has a diversified product portfolio with around 2030 range of products that cater to the needs of varied and long-standing customers across FMCG, apparel, and poultry and animal feed industries.

• As per the F&S Report, RBL is the largest manufacturer of textile specialty chemicals industry in India as on September 30, 2019 providing specialty chemicals for the entire value-chain of the textile industry starting from products for yarn production, production of man-made fibre, thread production, digital printing, fabric processing, dyeing auxiliaries, finishing range, garment finishing to products for printing.
• RBL has extensive manufacturing and technical capabilities with majority of products being manufactured in-house with flexible manufacturing capabilities. The existing capacity at Silvassa plant of 120,000 MTPA is expected to double at 252,500 by FY21.
• RBL has strong R&D capabilities with significant emphasis on innovation and sustainability which is considered as a key element of growth.
• RBL has wide sales and distribution network with 175 dedicated employees in sales and marketing team, over 204 distributors as on May 31, 2020 across India and 29 distributors spread in over 17 countries. The company also has four regional branch offices in Delhi, Ludhiana, Ahmadabad and Surat for marketing of the products to the customers in the North and West India regions.
• RBL has a strong management team with promoters cumulatively having over 45 years of experience in the chemicals industry. The Key Managerial Personnel too cumulatively have over 80 years of experience in the specialty chemicals industry which has immensely benefited the company grow at a faster pace.
• RBL has proven track record of robust financial performance from Fiscal 2017 to Fiscal 2019 with revenue increasing at a CAGR of 41.07%, EBIDTA at a CAGR of 79.87% and PAT increased at 78.83%.

Company strategies

• To expand manufacturing capacity and increase production efficiency to capitalize on the growth opportunities globally and locally in the specialty chemicals industry.
• To introduce new products to cater to the specific requirements of the customers and expand into new business segments and also focus on green products which is the need of the hour.
• To continue to focus on innovation and grow business across diverse customer segments.
• To increase wallet share with existing customers and continued focus to expand customer base by participating in trade shows, road shows and exhibitions. The company intends to continue to leverage the industry standing to enter new markets and establish relationships with new multinational, regional and local customers and expand customer base.
• To expand international operations to meet the expected growth rate of global speciality chemicals market. To achieve this, the company has set up a separate team for exports with the primary objective of expanding the business operations in international markets, create a distribution network and channel partners across geographies and build capabilities to serve such jurisdictions.
• To do strategic investment and seek to enter into acquisitions on opportunistic basis to aid inorganic growth.

Objects of Issue

Issue comprises of:

• Offer for sale (OFS): Each selling shareholder will be entitled to respective proportion of proceeds of OFS net of their proportion of offer related expenses.
• Fresh Issue: Net proceeds from net issue will be utilized towards:
• Repayment/prepayment of certain portion of the borrowings.
• To fund incremental the working capital requirement.
• General corporate purpose.

Note: The revenue, EBITDA and Net PAT figures reflect rupees in million.

BRLM Track Records

The merchant bankers associated with the issue have handled 31 issues in the past three financial years, out of which 14 issues closed below the issue price on the listing date.