India Pesticides IPO opens tomorrow: 10 things to know before subscribing the issue

The total offer size of Rs 800 crore comprises a fresh issue of Rs 100 crore and an offer for sale of Rs 700 crore by the selling shareholders. The offer for sale consists of Rs 281.4 crore worth of shares by promoter Anand Swarup Agarwal, and Rs 418.6 crore by other selling shareholders.

2) IPO Dates

India Pesticides IPO will open for subscription tomorrow till June 25. The issue will open for anchor investors for a day on June 22.

3) Price Band

India Pesticides in consultation with merchant bankers has fixed the price band for the issue at Rs 290–296 per equity share of face value of Re 1 each.

4) Lot Size and Reserved Portion Categorywise

Investors can bid for a minimum of 50 equity shares and in multiples of 50 equity shares thereafter. Retail investors can make a minimum investment of Rs 14,800 and the maximum would be Rs 1,92,400 as they are allowed to bid for a maximum amount of Rs 2 lakh.

Of the total issue size, up to 50 percent of the offer will be available for allocation to qualified institutional buyers, up to 15 percent for non-institutional bidders and the remaining 35 percent for retail individual bidders.

5) Objects of Issue

India Pesticides will utilise the net proceeds from the fresh issue to fund its working capital requirements and for general corporate purposes.

6) Company Profile

India Pesticides is the sole Indian manufacturer of five Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. Since commencing operations in 1984, it has diversified into manufacturing herbicide and fungicide Technicals and active pharmaceutical ingredients (APIs). It also manufactures herbicide, insecticide and fungicide Formulations.

Certain key fungicide Technicals the company manufactures include: (i) Folpet, used to manufacture fungicides that control fungal growth at vineyards, cereals, crops and biocide in paints; and (ii) Cymoxanil, used to manufacture fungicides that control downy mildews of grapes, potatoes, vegetables and several other crops. Major herbicide Technicals the company manufactures include, Thiocarbamate herbicides that have application in field crops, such as, wheat and rice, and are used globally.

The company manufactures various formulations of insecticides, fungicide and herbicides, growth regulators and Acaricides, which are ready-to-use products. As of March 2021, it manufactured over 30 Formulations that include Takatvar, IPL Ziram-27, IPL Dollar, IPL Soldier and IPL Guru.

The company currently has two manufacturing facilities - one is in Lucknow and second in Hardoi in Uttar Pradesh having an aggregate capacity of 19,500 MT (million tonnes) for Technicals and 6,500 MT for the Formulations vertical. It has registrations from the CIBRC (Central Insecticides Board and Registration Committee) for 22 agro-chemical Technicals and 125 Formulations for sale in India and 27 agro-chemical Technicals and 35 Formulations for export, while it has a license to manufacture from the Department of Agriculture, Uttar Pradesh for 49 agro-chemical Technicals and 158 Formulations.

As of March 2021, technicals are exported to over 25 countries including Australia and other countries in North and South America, Europe, Asia and Africa. It has a diverse customer base that includes crop protection product manufacturing companies such as Syngenta Asia Pacific, UPL, Ascenza Agro, Conquest Crop Protection, Sharda Cropchem and Stotras.

7) Competitive Strengths & Strategies

Competitive Strengths

a) Strong research & development (R&D) and product development capabilities;

b) Diversified portfolio of niche and quality specialized products;

c) Long-term relationship with key customers;

d) Advanced manufacturing facilities with focus on environment, health and safety;

e) Strong sourcing capabilities and extensive distribution network;

f) Consistent financial track record;

g) Experienced promoters and a strong management team.

Strategies

a) Focus on R&D and process innovation to expand product portfolio, grow customer base and revenue share with existing customers;

b) Undertake strategic initiatives including expansion of existing manufacturing capacity that will allow it to benefit from economies of scale and improve process efficiency in the manufacturing process;

c) Capitalise on industry opportunities;

d) Grow portfolio of Formulations products;

e) Expand business and geographical footprint through inorganic growth.

8) Financials and Peer Comparison

Technicals are primarily exported and revenue generated from these exports contributed to 56.71 percent of revenue from operations in FY21.

India Pesticides demonstrated consistent growth in terms of revenues and profitability over the last three fiscals. Its revenue from operations increased by 90.48 percent during FY19-FY21. It has maintained debt position with long term debt to equity ratio at 0.09, 0.06 and 0.02 in 2019, 2020 and 2021.

During FY19, FY20 and FY21, its ROCE (return on capital employed) was 32.33 percent, 35.82 percent and 45.18 percent, respectively, while ROE (return on equity) was 23.46 percent, 27.48 percent and 34.63 percent.

In addition, EBITDA margin was 20.73 percent, 21.61 percent and 29.20 percent.

9) Promoters and Management

Anand Swarup Agarwal and the ASA Family Trust are the promoters of the company, holding 46.97 percent pre-offer equity stake in the company. The total shareholding od promoter and promoter group is 82.68 percent.

Equity shareholding of major shareholders of the company

Anand Swarup Agarwal is the Chairman and non-executive Director of the company. He holds a bachelor's degree in law from the University of Lucknow. He has over 35 years of experience in agrochemical manufacturing.

Rajendra Singh Sharma is a whole-time Director of the company. He holds a bachelor's degree of science in agriculture from the University of Meerut. He has been associated with the company since last 22 years.

Rahul Arun Bagaria is the Non-Executive Director, while Adesh Kumar Gupta, Mohan Vasant Tanksale, and Madhu Dikshit are Independent Directors of the company.

Dheeraj Kumar Jain is the Chief Executive Officer of the company. He holds a bachelor's degree and a master's degree in chemical engineering from Osmania University, Hyderabad India. He has more than 25 years of experience with the Company and has been responsible for product development, international business development and project engineering.

Satya Prakash Gupta is the Chief Financial Officer of the company. He holds a bachelor's degree in commerce from the University of Allahabad. He is an associate member of the Institute of Cost Accountants of India and an associate of the Institute of Chartered Accountants of India. He has over 27 years of experience in the field of finance.

10) Allotment, refunds and listing dates

The company is expected to finalise the basis of allotment of shares with the designated stock exchange on June 30, while the funds will be refunded as well as unblocked from ASBA account on July 1.

Equity shares will be credited to demat accounts of eligible investors on July 2, and the trading in equity shares will commence from July 5, as per the schedule available in the red herring prospectus.