Delisted Chemplast Sanmar files papers for RS 3500cr IPO

Chennai-based Sanmar Group deals in chemicals, shipping and engineering. The company is the largest domestic paste PVC manufacturer. The group has revenues of more than $1 billion. Chemplast Sanmar – fifty years old and the flagship company of The Sanmar Group – is a major manufacturer of PVC resins, Caustic Soda, Chlorochemicals, Refrigerant gas and Industrial Salt. The manufacturing facilities are located at Mettur, Berigai, Panruti and Vedaranyam in Tamil Nadu and Karaikal in the Union Territory of Puducherry. The Chlorochemicals division of Chemplast, a result of backward integration by the Group, manufactures a wide range of products using a highly integrated manufacturing process. The salt needed for chlorine manufacture is supplied by Chemplast’s salt fields at Vedaranyam. The power-intensive electrolysis process of manufacturing chlorine is served by Chemplast’s own power plant. All this makes Chemplast one of the most integrated chemical plants in the country with a closed manufacturing loop. Located in Berigai, Tamil Nadu, 60 km from Bangalore, Sanmar Speciality Chemicals (SSC) manufactures a range of multi-customer products from Cyanation, Hydrogenation and high efficiency fractionation technologies. Its constant development of environment-friendly production processes has reduced the consumption of valuable natural resources.
The company, which was delisted about a decade ago, is now coming back to the stock market and will likely file the draft Red herring Prospectus (DRHP) next one week. It is seeking a valuation of ₹10,000 crore.. Nearly one and a half years ago, Fairfax India Holdings Corporation had completed an equity infusion into the Sanmar Chemicals Group, taking its equity holding in the group to about 43%. The company has raised NCDs in December 2019 which had let Debt To Equity of 1.49 in FY20 as compared to 0.18 in March 2019. The proceeds of the IPO will be used largely to reduce the company and group level debt. For FY20, the latest numbers available, the company reported a revenue of ₹1,259.31 crore, marginally higher than the revenue of ₹1,252.69 crore reported in the previous fiscal, according to a 31 July note by Brickworks Ratings. Profit fell to ₹98.74 crore in fiscal 2019-20, from ₹187.21 crore. Demand for PVC has seen robust growth 10-13% led by government new rule for irrigation sector and affordable housing segment.