Chhattisgarh-based Vraj Iron and Steel has filed its preliminary papers with the capital markets regulator SEBI to raise funds via initial public offering (IPO).
The public issue consists of only a fresh issuance of shares worth Rs 171 crore and there will be no offer-for-sale (OFS) component.
The company in consultation with the merchant banker may consider a fund-raising of Rs 34 crore in a pre-IPO placement before filing the red herring prospectus with the Registrar of Companies.
The Gopal Sponge and Power, V A Transport, and Vijay Anand Jhanwar-promoted company will spend Rs 129.5 crore of the net fresh issue proceeds for repaying debts obtained for expansion project at Bilaspur plant; and capital expenditure towards the said Bilaspur plant's expansion project. The remaining offer proceeds will be used for general corporate purposes and issue expenses.
With two manufacturing plants at Raipur and Bilaspur in Chhattisgarh, Vraj Iron and Steel manufactures sponge iron, M S billets, and TMT bars under its brand Vraj.
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It has a total installed manufacturing capacity of 2,31,600 tons per annum (TPA), comprising intermediate and final products. The manufacturing plant at Raipur also includes a captive power plant with a capacity of 5 MW, as of March 2023.
The company is in the process of increasing its capacities of existing manufacturing plants and captive power plant. "This is expected to increase the aggregate installed capacity (comprising of intermediate and final products) from 2,31,600 TPA to 5,00,100 TPA and captive power plants capacity from 5 MW to 20 MW," Vraj Iron said in its draft papers.
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These proposed expansions are expected to become operational in FY 2024-25, it added.
The company has recorded a net profit of Rs 54 crore for the year ended March FY23, increasing sharply from Rs 28.7 crore in the previous year and the revenue from operations during the same period jumped to Rs 515.7 crore, from Rs 414 crore.
Aryaman Financial Services is appointed as the merchant banker to the issue.
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