Kiri Dyes and Chemicals Ltd is coming out with its initial public offer (IPO) when most of the other companies have put on hold their IPO plans. This Rs 200 crore dyes and chemicals company had planned to come out initially with an IPO at a price of Rs 250 per share a few months back when the Indian capital markets were at all-time highs. But, the market crash that took place in early January forced the company to put on hold its IPO plan as big issues like Emaar MGF and Wockhard Hospitals got washed out.
Now, the company is finally venturing out into the market at a much lower price band of Rs 125-150 for a Rs 10 face value share. In spite of the slump in the grey markets, Kiri Dyes IPO is trading at a premium of Rs 14-Rs 15 per share. While the small size of the issue and its attractive valuations will enable the company to get its issue subscribed, at what price it will get listed on the bourses has to be seen.
Rating agency CRISIL has given a poor rating of 2 out of 5 for this IPO which will be open for subscription from March 25 to April 2.
Issue Details:
Kiri Dyes is planning to raise Rs 56.25 crore at the upper price band of Rs 150 to fund the expansion, capex and working capital. Company will issue 37,50,000 equity share of face value Rs 10 each in the price band of Rs 125-150 per share. Post IPO promoter and promoter group holding will come down to 66.57%.
Company has also made a pre-IPO allotment of 12.50 lakh shares raising Rs 14.40 crore. It allotted 11,18,860 shares or around 10% of equity capital to Well Prospering Ltd a subsidiary of Lonsheng Group (Losen) at Rs 115 per share and another 1,31,140 equity shares to SMS Technology Ltd at Rs 120 per share.
Company business: Kiri Dyes is a manufacturer and supplier of reactive dyes and dyes intermediates of various forms. Company also proposes to venture further into backward integration to make sulphuric acid and its derivative. Existing installed capacity includes 10,800 MTPA of dyestuff and 7,200 MTPA combined capacity of intermediates, vinyl sulphone and H acid.
Company's dyestuff plant is located at Vatva in Ahmedabad and intermediates and chemicals plants located at Padra in Vadodara. Company has also ventured in to 60:40 JV with Lonsen- Chinese company to start with production capacity of 20,000 MTPA of reactive dyes which to further increase to 50,000 MTPA later on. Lonsen's dyestuffs production capacity is 2 lakh MTPA higher than entire India's 1.5 lakh MTPA. JV company target production to commence by 1st quarter of FY 2009.
Objects of the issue: Company to spend around Rs 42crore to fund capex for setting up a plant to manufacture sulphuric acid, oleum and chlorosulphonic acid with a combined capacity of 1.8 lakh MTPA enabling backward integration and economies of scale at Vadodara.
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