The initial public offering of Shyam Metalics & Energy opens for subscription on Monday. The equity shares are proposed to be listed on the BSE and National Stock Exchange. ICICI Securities, JM Financial, Axis Capital, IIFL Securities, and SBI Capital Markets are the book running lead managers to the offer.
Here are 10 things to know about the public issue before subscribing:
1) Public Issue
The public issue of upto Rs 909 crore comprises a fresh issue of Rs 657 crore, and an offer for sale of Rs 252 crore by the existing shareholders.
The offer for sale comprises a sale of up to Rs 37 crore worth of shares by Subham Capital, Rs 63 crore by Subham Buildwell, Rs 25 crore by Kalpataru Housefin & Trading, Rs 30 crore by Dorite Tracon, and Rs 97 crore by Narantak Dealcomm.
The public issue includes 3 lakh equity shares reserved for employees. Eligible employees will get shares at a discount of Rs 15 per share to the final offer price.
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2) IPO Dates
The bidding for the public issue will begin on June 14 and the same will close on June 16, 2021.
3) Price Band
The company in consultation with merchant bankers has fixed a price band for its public issue at Rs 303-306 per equity share.
4) Lot Size and Reserved Portion Categorywise
Investors can bid for a minimum of 45 equity shares and in multiples of 45 equity shares thereafter. The minimum investment in the issue that can be made by retail investors is Rs 13,770 and the maximum can be Rs 1,92,780, at the higher end of the price band.
50 percent of the total offer size has been fixed for qualified institutional buyers, 15 percent for non-institutional bidders and the balance 35 percent for retail investors.
5) Objects of Issue
The company will utilise net proceeds from the fresh issue towards repayment of Rs 470 crore debt of itself and its subsidiary Shyam SEL and Power, and for general corporate purposes.
6) Company Profile
Shyam Metalics is a leading integrated metal producing company in India. It primarily produces intermediate and long steel products, such as iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferroalloys products.
It is amongst the largest producers of ferroalloys in terms of installed capacity in India, as of February 2021. The company currently operates three manufacturing plants that are located at Sambalpur in Odisha, and Jamuria and Mangalpur in West Bengal.
As of December 31, 2020, the aggregate installed metal capacity of its manufacturing plants was 5.71 million tonne per annum (MTPA). Its manufacturing plants also include captive power plants with an aggregate installed capacity of 227 MW.
Shyam Metalics is also in the process of increasing the capacities of existing manufacturing plants and captive power plants, to 11.60 MTPA and 357 MW respectively. These proposed expansions are expected to become operational between FY22 and FY25. In addition, it is in the process of commissioning an aluminium foil rolling mill at Pakuria in West Bengal with a proposed installed capacity of 0.04 MTPA, which is expected to become operational in FY22.
7) Competitive Strengths & Business Strategies
a) The company has integrated operations across the steel value chain.
b) It has strategically located manufacturing plants supported by robust infrastructure resulting in cost and time efficiencies.
c) It has a diversified product mix with a strong focus on value-added products, such as ferroalloys, association with reputed customers and a robust distribution network.
d) It has strong financial performance and credit ratings.
e) It has experienced promoter, board and senior management team.
Business Strategies
a) The company intends to strengthen its leading market position in India and achieve better economies of scale by expanding existing manufacturing capacities and setting up additional manufacturing plants.
b) It intends to introduce new products by leveraging forward integration capabilities.
c) It intends to continue to maintain low leverage with healthy capitalisation metrics.
d) It intends to continue to focus on cost efficiency and increase profitability and market share.
e) It intends to focus on exports that typically result in higher margins and timely realisation of revenue streams.
8) Financials
Shyam Metalics has a consistent track record of delivering operating profitability, and since the commencement of operations in FY05, it has delivered a positive EBITDA in each of the fiscals.
Its revenue from operations increased at a CAGR of 6.56 percent during FY18-FY20 and was Rs 3,933 crore in the nine months ended December 2020. Its EBITDA amounted to Rs 634 crore and Rs 717.3 crore in FY20 and the nine months ended December 2020, respectively.
As of December 2020, its gross debt to equity ratio was 0.27, and RoCE (return on capital employed) for 9MFY21 at 13.30 percent.
It has also obtained strong credit ratings. In particular, company and its subsidiary, Shyam SEL and Power (SSPL), has received A1+, AA-/ Stable, and A1+ rating from CRISIL for their short-term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively. In addition, the company and its subsidiary, Shyam SEL and Power, has received A1+, AA-/ Stable, and A1+ rating from CARE for their short-term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively.
9) Promoters and Management
Mahabir Prasad Agarwal, Brij Bhushan Agarwal, Sanjay Kumar Agarwal, Subham Capital, Subham Buildwell, Narantak Dealcomm, Kalpataru Housefin, Dorite Tracon and Toplight Mercantiles are the promoters of the company. Promoters held 98.49 percent of pre-offer paid-up equity share capital of the company.
Mahabir Prasad Agarwal is the Non-Executive Chairman of company. Brij Bhushan Agarwal is the Vice Chairman and Managing Director of the company.
Sanjay Kumar Agarwal is the Joint Managing Director of the company. He has over 17 years of experience in the steel and ferro alloys industry. He is primarily responsible for the operations of our manufacturing plants at Sambalpur, Jamuria and Mangalpur, with focus on cost control, production efficiency and competitive procurement of raw material.
Deepak Kumar Agarwal, Bhagwan Shaw, and Dev Kumar Tiwari are the Whole-time Directors of the company. Venkata Krishna Nageswara Rao Majji, Yudhvir Singh Jain, Ashok Kumar Jaiswal, Ajay Choudhury, and Kishan Gopal Baldwa are Independent Directors of the company. Rajni Mishra is an Additional Independent Director of the company.
10) Allotment, refunds and listing dates
Shyam Metalics in consultation with merchant bankers will finalise the IPO share allotment around June 21, and the funds will be refunded around June 22.
Equity shares will get credited to eligible investors' demat accounts around June 23, and the trading in equity shares will begin with effect from June 24, as per the schedule available in the company's red herring prospectus.
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