Specialty chemicals company Ami Organics will launch its initial public offering (IPO) next week.
Here are 10 things to know before subscribing to the public offer
1) IPO Dates
The offer will open for bidding during September 1-3. The anchor portion, if any, will open for one day on August 31.
2) IPO Price Band
The price band for the offer has been fixed at Rs 603-610 per equity share.
3) Public Issue Details
The initial public offering comprises a fresh issue of Rs 200 crore and an offer of sale of up to 60,59,600 equity shares by 20 selling shareholders including Parul Chetankumar Vaghasia, Girishkumar Limbabhai Chovatia, Kiranben Girishbhai Chovatia, and Aruna Jayantkumar Pandya.
The company has already raised Rs 100 crore in a pre-IPO placement. Hence, the fresh issue size has been reduced to Rs 200 crore from Rs 300 crore earlier.
The company will raise Rs 565.39 crore at the lower end of the price band, and Rs 569.63 crore at the upper end.
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4) Objectives Of IPO
The net proceeds from the fresh issue and the funds from the pre-IPO placement will be utilised to repay debts (Rs 140 crore), working capital requirements (Rs 90 crore), and general corporate purposes.
The proceeds of the offer for sale will be received by the selling shareholders. The company will not receive any proceeds from the offer for sale.
5) Lot Size and Investors' Reserved Portion
Investors can bid for a minimum of 24 equity shares and in multiples of 24 equity shares thereafter. Retail investors can bid for a minimum of Rs 14,640 worth of shares in a single lot, and the maximum investment would be Rs 1,90,320 for 13 lots, as they are allowed to invest up to Rs 2 lakh.
Half of the offered size is reserved for qualified institutional buyers, 15 percent for non-institutional bidders, and the remaining 35 percent for retail investors.
All investors (except anchor investors) are required to mandatorily participate in the offer only through the Application Supported by Blocked Amount (ASBA) process.
6) Company Profile and Industry Outlook
The company manufactures specialty chemicals that are used towards the development and manufacturing of advanced pharmaceutical intermediates for regulated and generic active pharmaceutical ingredients (APIs) and New Chemical Entities (NCE), and key starting material for agrochemical and fine chemicals. It is one of the major manufacturers of pharma intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib, and Rivaroxaban.
It has developed and commercialised over 450 pharma intermediates for APIs across 17 key therapeutic areas since inception and NCE. Revenue from pharma intermediates business contributed 88.41 percent to total revenue in FY21.
Along with the domestic market, the company also supplies pharma intermediates to various multi-national pharmaceutical companies in large and fast-growing markets of Europe, China, Japan, Israel, the UK, Latin America, and the US. In FY21, exports contributed 51.57 percent to total revenue.
The Indian chemicals market was valued at $166 billion (around 4 percent share in the global chemical industry) in 2019. It is expected to reach around $326 billion by 2025, with an anticipated growth of around 12 percent CAGR. The specialty chemical industry forms around 47 percent of the domestic chemical market, which is expected to grow at a CAGR of around 11-12 percent by 2025.
India's specialty chemical companies are gaining favour with global MNCs because of the geopolitical shift after the outbreak of Covid-19 as the world looks to reduce its dependence on China. Currently, China accounts for around 15-17 percent of the world's exportable specialty chemicals, whereas India accounts for merely 1-2 percent, indicating that the country has a large scope of improvement and widespread opportunity. It is anticipated that specialty chemicals will be the next great export pillar for India.
7) Strengths and Strategies
a) Strong and diversified product portfolio ably supported by strong R&D and process chemistry skills;
b) Extensive geographical presence and diversified customer base with long-standing relationships;
c) High entry barriers in the chemicals manufacturing industry;
d) Strong sales, marketing and distribution capabilities;
e) Experienced and dedicated management team;
f) Strong balance sheet with stable cash flows.
a) Diversify product portfolio by strengthening R&D capabilities;
b) Augment scale through organic and inorganic routes in the current geographic markets and expanding into new geographic markets;
c) Focus on cost efficiency and improving productivity while employing environmentally friendly processes;
d) Pursue strategic acquisitions and partnerships to complement organic growth and internal expertise.
Ami Organics registered a growth in revenue from operations at a CAGR of 19.50 percent during FY19-FY21 to Rs 340.61 crore and profit grew at a CAGR of 52.25 percent in the same period, to Rs 54 crore in FY21.
Financial Performance of Last 3 Fiscals
9) Promoters and Management
Promoters Nareshkumar Ramjibhai Patel, Chetankumar Chhaganlal Vaghasia, Shital Nareshbhai Patel, and Parul Chetankumar Vaghasia held 45.17 percent pre-offer stake in the company.
Nareshkumar Ramjibhai Patel is the Executive Chairman and Managing Director of the company. He has 18 years of experience in the specialty chemicals manufacturing sector. He set up a partnership firm in Surat, CNR Intermediates, for manufacturing, purchasing and selling all kinds of chemicals, before founding the partnership firm Ami Organics with Girishkumar Limbabhai Chovatia and Chetankumar Chhaganlal Vaghasia in 2004. He is currently also a designated partner at Globe Bio Care.
Chetankumar Chhaganlal Vaghasia is a Whole-time Director of the company. He has 19 years of experience in the specialty chemicals manufacturing sector. He set up a partnership firm in Surat, CNR Intermediates, for manufacturing, purchasing and selling all kinds of chemicals, before founding the partnership firm Ami Organics in 2004. He is currently also a designated partner at Globe Bio Care.
Virendra Nath Mishra is the Whole-time Director of the company. He was over 25 years of experience in the research and operations management specialty chemicals manufacturing sector. He has been associated with the company since 2005. Prior to joining the company, he was associated with K.A. Malle Pharmaceuticals as an Officer (Research and Development) and Surya Organics and Chemicals.
Girikrishna Suryakant Maniar, Richa Manoj Goyal, and Hetal Madhukant Gandhi are Independent Directors on the board.
Abhishek Haribhai Patel is the Chief Financial Officer of the company. Prior to joining the company, he was associated with Abhiket Financial Services as the Managing Director, Adventity Global Services as an Analyst, Business Research, with Kemrock Industries and Exports as Assistant Manager – Finance and with Anil Limited as Manager – Finance.
Among others, Plutus Wealth Management LLP has a 1.5 percent stake and IIFL Special Opportunities Fund - Series 7 has a 1 percent shareholding in the company.
10) Allotment, refunds and listing dates
The company will finalise the IPO share allotment on September 8, and the funds will be refunded around September 9, 2021.Equity shares will be credited to eligible investors' demat accounts around September 13. Trading in shares will commence with effect from September 14 on both BSE and NSE.