Sanathan Textiles files draft papers with Sebi to raise up to Rs 1,300 crore via IPO

Sanathan Textiles may also consider a pre-IPO placement of up to Rs 100 crore before filing red herring prospectus (RHP) with the IPO registrar

Sanathan Textiles has filed draft red herring prospectus (DRHP) with the capital markets regulator Sebi to raise funds via initial public offering (IPO).

The IPO comprises a fresh issue of Rs 500 crore by the company, and an offer for sale of 1.14 crore equity shares by promoters. It is a 100 percent promoters' owned entity.

The offer for sale (OFS) consists of 23,51,100 equity shares by Pareshkumar Dattani, 26,59,500 equity shares by Ajaykumar Dattani, 25,57,500 equity shares by Anilkumar Dattani, and 28,27,500 equity shares by Dineshkumar Dattani.

Promoter group shareholders will also offload their equity shares via offer for sale including 18,000 shares each by Vajubhai Investments, Vallabhdas Dattani HUF, and Dineshkumar Dattani HUF.

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Among other promoters, Sonali Dattani, Beena Dattani, Anilkumar Dattani HUF, Pareshkumar V Dattani HUF, and Mikesh Dattani together will also sell 9.5 lakh shares via OFS.

Sanathan Textiles may also consider a pre-IPO placement of up to Rs 100 crore before filing red herring prospectus (RHP) with the IPO registrar. If the said pre-IPO placement is executed, then accordingly the fresh issue amount in the IPO will get reduced.

The company is expected to raise Rs 1,200-1,300 crore through its IPO, as per market sources.

The company will utilise fresh issue proceeds for repaying of debts, and working capital requirements, besides general corporate purposes.

Sanathan Textiles has its presence across the polyester, cotton and technical textile sectors. The company claims it has a diversified product portfolio with capability to manufacture over 12,900 varieties of yarn products with more than 1,00,000 SKUs (stock-keeping units) that are used in various forms and for varied end uses, as of September 30, 2021.

Its business is divided into three separate yarn business verticals - polyester yarn products; cotton yarn products; and yarns for technical textiles and industrial uses.

Sanathan Textiles has a manufacturing facility at Silvassa, where, the firm says, it has scaled up production to 2,21,050 MTPA across the three yarn verticals as of September 30, 2021.

The company clocked profit of Rs 185.63 crore for the financial year FY21, up from Rs 46.01 crore in FY20, but revenue from operations fell to Rs 1,918.35 crore from Rs 2,116.6 crore during the same period.

The profit for the six-month period ended on September 30, 2021 stood at Rs 170.77 crore on revenue of Rs 1,430.94 crore with exports contributing to 12.36 percent of revenue.

Edelweiss Financial Services, and JM Financial are appointed as the book running lead managers to the issue.