Shiva Pharmachem files draft papers to raise Rs 900 crore via IPO

On August 21, Shiva Pharmachem, a manufacturer of acid and alkyl chlorides, submitted a preliminary red herring prospectus to the Securities and Exchange Board of India (SEBI) in preparation for an initial public offering.

According to draught documents lodged with the market regulator, the company intends to raise Rs 900 crore through a public offering consisting solely of an offer for sale (OFS) by its promoters.

Vishal Rakesh Agrawal and Rahul Rakesh Agrawal will sell 383 crore rupees worth of shares via OFS, while Geetganga Investment will sell 134 crore rupees worth of shares.

Therefore, the Gujarat-based speciality chemicals firm will not receive any funds from the public offering. With the exception of issue expenses, the entire amount will go to selling shareholders.

The promoter-owned company with three facilities in Luna and Dahej SEZ in Gujarat and Sajóbábony in Hungary claimed to be India's largest producer of acid and alkyl chlorides by volume in 2022.

During the fiscal year, 181 multinational and domestic companies were served by the business, which received over 80 percent of its revenue from exports. It offered over a hundred specialised products, including aromatic and aliphatic chlorides, aromatic and aliphatic nitriles, alkoxy ketones, herbicide safeners, thiocarbamates, chloroformates, and isocyanates.

These products are utilised primarily in industries such as agrochemicals, performance materials, disinfectants, pharmaceuticals, polymers, and cosmetics. DuPont Specialty Products USA LLC, Godrej Agrovet, Nouryon Functional Chemicals BV, Reckitt Benckiser (India), SRF, and Syngenta Crop Protection AG are among its clients.

For the fiscal year ending in March FY23, Shiva Pharmachem's revenue from operations increased by 6.2% year-over-year to Rs 1,079.5 crore. During the same time period, net income increased by 40 percent to Rs 116.65 crore, and margins increased by 259 basis points to 10.66 percent for the year, despite a single-digit increase in revenue.

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EBITDA (earnings before interest, tax, depreciation, and amortisation) in FY23 increased by 27.8 percent to Rs 204.2 crore with margin expanding by 320 basis points to 18.92 percent compared to the previous year, whereas the borrowings at the end of FY23 stood at Rs 347.1 crore, an increase of 8.3 percent compared to the previous year.

JM Financial and Kotak Mahindra Capital Company are the merchant financiers for the offering, while Link Intime India is the registrar.