Hemani Industries files draft papers, to raise Rs 2,000 crore via IPO

Chemicals

Agrochemicals and specialty chemicals manufacturer Hemani Industries has filed preliminary papers with the capital markets regulator Securities and Exchange Board of India (SEBI) for an initial public offering (IPO).

The company plans to raise up to Rs 2,000 crore through its public issue that comprises a fresh issue of Rs 500 crore and an offer for sale (OFS) of Rs 1,500 crore by the promoters.

Promoters Jayesh Mohan Dama, Mohan Sunderji Dama, and Minal Mohan Dama, who cumulatively have a 100 percent shareholding in the company, are going to sell shares worth Rs 500 crore each.

The company may also consider a private placement of Rs 100 crore before filing the red herring prospectus with the registrar of companies. If this pre-IPO placement is undertaken, the fresh issue size will be reduced accordingly.

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The net fresh issue proceeds will be utilised for capacity expansion at its plant in Saykha industrial estate, Gujarat, repaying debts of the company and subsidiary Hemani Crop Care Pvt Ltd and long-term working capital requirements, besides general corporate purposes.

The products manufactured by the chemical company are used for crop protection (insecticides, herbicides and fungicides), and for wood protection, veterinary, household and public health applications.

The company is also engaged in contract research and manufacturing services (CRAMS) and contract manufacturing for multinational and domestic companies in the agrochemical and specialty chemicals areas.

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It was the leading player in the Indian pyrethroid (a type of insecticides) market in fiscal 2021, a report by consulting firm Frost & Sullivan said. It was also the largest global producer by volume of pesticide intermediate meta phenoxy benzaldehyde (MPBD), and cypermethrin (technical grade), a kind of pyrethroid, in 2020.

Hemani Industries is predominantly focused on exports with operations in high-growth regions such as the Asia-Pacific, Latin America, the US, Russia, Africa and Australia. In FY21 it exported products to 60 countries.

Its major customers include Alchemie Overseas, Arysta LifeScience Benelux SRPL, Bayer Vapi, Dhanuka Agritech, Jiangsu Yangnong Chemical Co., Shandong Rainbow Agrosciences Co. Ltd, Sharda Cropchem, Tagros Chemicals India and UPL.

In the six months ended September 2021, Hemani clocked an impressive 65 percent year-on-year growth in consolidated profit to Rs 112.76 crore and revenue grew by 44.3 percent to Rs 714.40 crore compared to the year-ago period.

Consolidated profit in FY21 at Rs 169.4 crore grew 27 percent over the previous year. Revenue in the same period rose 17.2 percent to Rs 1,171.9 crore versus Rs 1,000 crore in FY20.

JM Financial and Kotak Mahindra Capital are the book-running lead managers to the issue, while Link Intime India is the registrar to the offer.
Cyril Amarchand Mangaldas and J Sagar Associates are the legal advisers to the offer.