Chemplast Sanmar files DRHP for Rs3.5k Cr IPO

chemplast sanmar ipo

Canadian billionaire Prem Watsa-backed Chemplast Sanmar Ltd has filed a draft red herring prospectus (DRHP) with the market regulator to raise ₹3,500 crore via an initial public offering (IPO).

Chemplast Sanmar’s IPO will include a fresh issue of ₹1,500 crore and an offer for sale of ₹2,000 crore by its existing promoters and shareholders.

The offer for sale constitutes the sale of ₹1,850 crore by Sanmar Holdings Ltd and ₹150 crore by Sanmar Engineering Services Ltd.

The company is part of Chennai-based industrial conglomerate Sanmar Group, which focuses on chemicals, shipping, and engineering.

It produces paste PVC, chloro-chemicals, caustic soda, hydrogen peroxide, and refrigerant gases, and also has a contract manufacturing division.

The funds generated from the issue will be utilized for the early redemption of non-convertible debentures (NCDs) worth ₹1,238.25 crore, the company stated.

In the draft prospectus, Chemplast Sanmar said, “The early redemption of the NCDs in full will help reduce our outstanding indebtedness and debt servicing costs, assist us in maintaining a favorable debt to equity ratio, and enable utilization of our internal accruals for further investment in business growth and expansion.” 

Chemplast sanmar ipo

“In addition, we believe that our improved leverage ratio, consequent to such redemption of NCDs, will improve our ability to raise debt in the future to fund potential business development opportunities and plans,” the company stated.

For FY 2020, the company registered a total income of ₹1,265.51 crore against ₹1,266.77 crore last year.

Net profit for the period was at ₹46.13 crore as compared to ₹118.46 crore in the previous year. As of December 2020, its net debt stood at ₹1,187.58 crore.

ICICI Securities, Axis Capital Ltd, and some other investment banks are advisors to the IPO.

Chemplast Sanmar has a great growth trajectory and if the IPO is successful, would have huge growth opportunities.

Shishir Gupta, Founder and CEO, StartupLanes

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