Delisted Chemplast Sanmar files IPO papers with SEBI; plans to launch Rs 3,500 crore public issue

Upon successful listing, Chemplast Sanmar will join the likes of PI Industries, SRF Ltd, Finolex Industries and Navin Fluorine International Ltd. Image: sanmargroup.com

Chemplast Sanmar, which was delisted nearly a decade ago, filed a Draft Red Herring Prospectus (DRHP) with the capital markets regulator SEBI to raise Rs 3,500 crore via IPO. The public issue will comprise a fresh issue of Rs 1,500 crore and an offer-for-sale (OFS) of Rs 2,000 crore by the existing promoters and shareholders. Chemplast Sanmar is a part of Chennai-based industrial conglomerate Sanmar Group, and is backed by Canadian billionaire Prem Watsa. The OFS comprises the sale of Rs 1,850 crore by Sanmar Holdings Ltd and Rs 150 crore by Sanmar Engineering Services Ltd. According to DRHP, Chemplast Sanmar was delisted from BSE, NSE and MSE with effect from June 25, 2012, June 18, 2012 and June 25, 2012, respectively.

Chemplast Sanmar listed industry peers

Upon successful listing, Chemplast Sanmar will join the likes of PI Industries, SRF Ltd, Finolex Industries and Navin Fluorine International Ltd. The average industry P/E ratio is 45.27x. The company has planned to utilise the net proceeds towards funding the early redemption of NCDs issued by the company, in full worth Rs 1,238 crore; and for general corporate purposes. Global coordinators and book running lead managers include ICICI Securities, Axis Capital, Credit Suisse Securities Pvt Ltd, IIFL Securities, Ambit Pvt Ltd, BOB Capital Markets Ltd, HDFC Bank, IndusInd Bank, and YES Securities. The registrar to the issue is KFin Technologies Pvt Ltd. “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 said.

Chemplast Sanmar financials

For fiscal 2020, Chemplast Sanmar recorded a total income of Rs 1,265.51 crore against Rs 1,266.77 crore in the previous year. While for the nine months ended December 31, 2020, it posted a total income of Rs 877.5 crore. The company clocked a net profit Rs 46.13 crore in fiscal 2020 as compared to Rs 118.46 crore a year ago. As of December 2020, its net debt stood at Rs 1,187.58 crore. Chemplast Sanmar is specialty chemicals manufacturer in India with focus on specialty paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors. The total production of specialty paste PVC resin in India in financial year 2020 stood at 78 KTPA against a demand of 143 KTPA.

In India, Grasim Industries Ltd. (including Aditya Birla Chemicals), DCM Shriram Limited (DCM Shriram), Gujarat Alkalies and Chemicals Ltd.(GACL), and Reliance Industries Limited (RIL) have a combined capacity of more than 2800 KTPA. Grasim Industries Ltd. has chlor-alkali facilities at seven locations, DCM Shriram, Chemplast Sanmar and GACL at two locations each, and Reliance Industries at one location. Most of these facilities are located in the western part of the country. Capacity utilisation of Indian players declined in financial year 2020 owing to a rise in imports and weak demand. In the long run, India is expected to turn net exporter of caustic soda as capacity additions outpace incremental demand with the expected capacity additions in chlorine downstream supporting the industry.