Laxmi Organic Industries, a specialty chemicals manufacturer, will open its initial public offering for subscription in the coming week, which will be busy with five IPOs lined up for launch.
Laxmi Organics shares are going to be listed on the BSE as well as National Stock Exchange. Axis Capital and DAM Capital Advisors (formerly IDFC Securities) are the lead managers to the offer.
Here are 10 things to know before investing in the public issue:
1) IPO dates
The initial public offering will open for bidding on March 15 and close on March 17, 2021.
2) Price band
The price band has been fixed at Rs 129–130 per share of a face value of Rs 2 each.
3) Public issue
The Rs 600-crore issue comprises a fresh issue of Rs 300 crore and an offer for sale of Rs 300 crore by Yellow Stone Trust, the promoter selling shareholder.
The company, after consultation with the merchant bankers, raised Rs 200 crore by issuing 1,55,03,875 equity shares under pre-IPO placement issue. The fresh issue size stands reduced from Rs 500 crore to Rs 300 crore and consequently, the total offer size has been reduced to Rs 600 crore from Rs 800 crore.
The company has already garnered Rs 180 crore from anchor investors on March 12.
The minimum bid lot is 115 equity shares and in multiples of 115 shares thereafter. The minimum application size at the higher price band works out to Rs 14,950.
4) Objects of issue
Laxmi Organic Industries is going to utilise net proceeds from the fresh issue for repayment and funding the capital expenditure requirements for a manufacturing facility for fluorospecialty chemicals pursuant to investment in the wholly-owned subsidiary, Yellowstone Fine Chemicals (YFCPL).
The proceeds from the fresh issue will also be invested in YFCPL to fund its capital requirements, funding the expansion of the SI manufacturing facility, working capital requirements of the company and for the purchase of plant and machinery to augment infrastructural development at its SI manufacturing facility.
5) Company profile
Laxmi Organic Industries is a leading manufacturer of acetyl intermediates (AI) and specialty intermediates with almost three decades of experience in large-scale manufacturing of chemicals. It has two manufacturing units in Mahad, Maharashtra. The installed production capacity at the AI manufacturing facility was 161,320 MTPA, while the aggregate installed production capacity at the specialty intermediates facility was 78,045 MTPA.
It is among the largest manufacturers of ethyl acetate in India with a market share of approximately 30 percent, says Frost & Sullivan. Further, post completion of the YCPL acquisition, its market share in the ethyl acetate market will be further enhanced.
It is the only manufacturer of diketene derivatives in India, with a market share of approximately 55 percent in terms of revenue in FY20. The company operates into two broad categories—acetyl intermediates and the specialty intermediates. Its products are used in pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives and other industries.
Laxmi Organic,which also proposes to diversify into specialty fluorochemical, has customers in over 30 countries, including China, the Netherlands, Russia, Singapore, United Arab Emirates, United Kingdom and the United States.
It has a long-standing relationship with marquee players including Syngenta Asia Pacific, Alembic Pharmaceuticals, Covestro (India), Dr Reddy's Laboratories, Flint Group India, Granules India, Hetero Labs, Heubach Colour, Hubergroup India, Huhtamaki India, Laurus Labs, Macleods Pharmaceuticals, Mylan Laboratories, Neuland Laboratories, Parikh Packaging, Suven Pharmaceuticals, Colourtex Industries, and UPL.
a) It is a leading manufacturer of ethyl acetate with a significant market share.
b) It is the only Indian manufacturer of diketene derivatives, with one of the largest portfolios of diketene products.
c) It has a diversified customer base across high-growth industries.
d) It has two manufacturing facilities, vertical integration and supply chain efficiencies.
e) It has in-house research and development capabilities and a consistent track record of technology absorption.
f) It has global presence and low geographical concentration.
g) It has a differentiated business model, asset base, product mix and experience in handling complex chemistries
h) The company has experienced promoter, board of directors and key managerial personnel.
a) Te company intends to maximise production volumes at manufacturing facilities by expanding installed capacities to support growth initiatives.
b) It intends to diversify its portfolio by adding new products (including downstream and value-added products)
c) It intends to expand its global footprint and augment growth in current geographies.
d) The company intends to establish fluorospecialty chemicals business, and capture the market share of Miteni
e) It plans to continue the focus on innovation and leveraging chemistries and technology absorption.
Laxmi Organic Industries reported consolidated revenue from operations at Rs 813.4 crore, Rs 1,534.1 crore, Rs 1,568.52 crore and Rs 1,393 crore for the six months ended September 2020 and FY20, FY19 and FY18, respectively. Its consolidated profit for the same periods stood at Rs 45.48 crore, Rs 70.2 crore, Rs 72.39 crore and Rs 75.7 crore.
9) Promoters and management
The promoters of Laxmi Organic are Ravi Goenka and Yellow Stone Trust, which held 19,99,38,282 equity shares in aggregate, representing 83.10 percent of the paid-up equity of the company.
Goenka is the Chairman and Managing Director of the company. He has approximately 30 years of experience in the chemicals and paper industries. He has experience in the education and power industry as well. He is a director on the board of International Knowledge Park. He is also the president of the executive committee of the Indian Chemical Council for the period from 2020 to 2022.
Satej Nabar is an Executive Director and Chief Executive Officer of the company. He has been associated with the company since April 2020 and has around 31 years of experience in the chemicals industry.
Harshvardhan Goenka is an Executive Director–business development and strategy of the company. He has nine years of experience in the chemicals industry. He has been associated with the company since September 2011.
Rajeev Goenka is the Non-Executive Director of the company, while Manish Chokhani, OV Bundellu, Sangeeta Singh and Rajeev Vaidya are independent directors on the board.
Partha Roy Chowdhury is the Chief Financial Officer and President – Corporate. He has more than 31 years of experience in building and leading businesses through complex operational issues, financial restructuring, international expansion and capital market transactions.
10) Allotment, refunds and listing dates
The company and promoter selling shareholder, in consultation with lead managers, will finalise the share allotment around March 22 and will unblock funds from ASBA account or refunds (if any for anchor investors) around March 23, says the prospectus.
The company will credit allotted shares to the demat accounts of eligible investors around March 24 and the shares will list on the bourses around March 25.