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Archean Chemical Industries Files DRHP with SEBI for Its IPO

16 January 20236 mins read by Angel One
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The speciality marine chemical manufacturer Archean Chemical Industries Ltd. takes a step towards the launch of its IPO by filing the draft papers with market regulator SEBI this week.

Read on to obtain more information on this matter!

A Closer Look into Archean Chemical’s IPO

As per the draft papers filed with the Securities and Exchange Board of India, Archean Chemical Industries Ltd. plans to raise around Rs. 2,200 crores through an initial share sale. This IPO will include a fresh issue of its equity shares amounting to nearly Rs. 1,000 crores, alongside an offer for sale where existing stakeholders will offload up to 1.9 crore shares. As per the Draft Red Herring Prospectus (DRHP), this also includes the India Resurgence Fund, a joint venture between the Piramal Group and Bain Capital.

Archean Chemical Industries Ltd. plans to use the proceeds from this initial public offering to partially or fully redeem non-convertible debentures. This way, the company will benefit from an improved debt-equity ratio, reduction in debt servicing cost, and outstanding indebtedness. Apart from this, the company will also enable it to utilise internal accruals for further investing, thus adding to overall growth and expansion.

The following table shows the detailed breakup of the OFS in this public issue.

Stakeholders

Share Divestment

CS LLP or Chemikas Speciality LLP

Up to 5.3 million shares

IRF I or India Resurgence Fund Scheme I

Up to 3.37 million shares

IRF II or India Resurgence Fund Scheme II

Up to 6.30 million shares

PNRPL or Piramal Natural Resources Pvt. Ltd.

Up to 3.37 million shares

This means that CS LLP will hold 41%, IRF I will own 7.46%, IRF II will have 12.19%, and PNRPL will be the owner of 7.46% of the company’s stake, respectively.

About the Company – Archean Chemical Industries Ltd.

Archean Chemical Industries Ltd. is a leading speciality marine chemical industry that primarily focuses on manufacturing and exporting industrial salt, bromine, and sulphate of potash. Its centre of production is in the Rann of Kutch, where it has built brine reserves. The place lies on the coast of Gujarat. However, the manufacturing part is carried out at a facility near Hajipir in Gujarat.

This company produces key initial level bromine, which has a wide application in sectors like agrochemical, pharma, additives, water treatment, oil, gas, flame retardant and energy storage segments.

Archean Chemical Industries Ltd. also produces industrial salt that serves as an essential raw material in the chemical industry. The chemical industry uses it to further produce different compounds and other chemicals. Additionally, the sulphate of potash helps make fertilisers and has several medical uses.

Financial Highlights of Archean Chemical Industries Ltd.

According to the company’s DRHP, Archean Chemical Industry has marketed its product in 13 different countries and to around 13 global customers as of 30 September 2021. In addition, it also approached 29 domestic customers for sale.

This company’s revenue from operations has shown a CAGR of 9.42% in two years. In FY 2019, the revenue was Rs. 565.5 crores which increased to Rs. 740.76 crores in FY 2021.

Talking about the book running lead manager to the IPO, it includes IIFL Securities, JM Financial and ICICI Securities.

Wrapping Up

Looking at the compound annual growth of Archean Chemical Industries Ltd. and its upcoming initial public offering, this company is expected to expand more in future. The condition will also improve in the debt-equity ratio benefiting the company overall. As a result, analysts expect the market to experience a positive shift. However, interested investors should always measure the risks before investing to prevent undesirable surprises.

Frequently Asked Questions

  1. What is the net profit made by this company under revenue operating cost as of September 2022?

The net profit stood at Rs. 58 crores when the company’s standalone revenue operating hit Rs. 450 crores, i.e., as of September 2022.

  1. What is the current age of Archean Chemical Industries Ltd.?

Archean Chemical Industries Ltd. was incorporated on 14 July 2009 and is currently 13 years of age.

  1. Who are the Directors of Archean Chemical Industries Ltd.?

The Directors of Archean Chemical Industries Ltd. are Shantanu Yeshwant Nalavadi, Ranjit Pendurthi, Subrahmanyam Meenakshisundaram and Padma Chandrasekaran, among others.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.

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