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Godavari Biorefineries IPO: Ethanol-Based Chemicals Maker Eyes Rs.325 Cr From Fresh Issue

19 June 20244 mins read by Angel One
Godavari Biorefineries filed for an IPO to raise Rs.325 crore, including Rs.240 crore fresh issue, to repay loans and expand its ethanol-based chemicals business.
Godavari Biorefineries IPO: Ethanol-Based Chemicals Maker Eyes Rs.325 Cr From Fresh Issue
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Godavari Biorefineries, a prominent player in the ethanol-based chemicals sector, has filed a Draft Red Herring Prospectus (DRHP) with SEBI for its upcoming Initial Public Offering (IPO). The company aims to raise Rs.325 crore through this IPO, which includes a fresh issue worth Rs.240 crore and an offer for sale (OFS) by existing shareholders.

Background

Founded in 1956, Godavari Biorefineries is renowned for its ethanol production, which serves as a key input for various chemical products. The company operates integrated manufacturing facilities that produce a diverse range of products, including ethanol, power, and chemicals. With a strong focus on sustainability and innovation, Godavari Biorefineries has established itself as a leader in the bio-based chemicals industry.

Details of the IPO

Godavari Biorefineries IPO comprises a fresh issue of Rs 240 crore, supplemented by an OFS where current stakeholders will divest their shares. This move is expected to provide the company with the capital required for expansion and debt reduction. Godavari Biorefineries intends to use the funds primarily to repay or prepay a portion of its outstanding loans, which will strengthen its financial position and reduce interest liabilities.

Offer for Sale (OFS) Breakdown

The IPO comprises a fresh issue of shares worth ₹325 Crore and an offer for sale (OFS) of up to 6.53 million shares by existing shareholders and promoters. The breakdown of the OFS is detailed below:

Shareholder Shares Offered
Mandala Capital AG up to 4.93 million
Somaiya Agencies up to 5 lakh
Samir Shantilal Somaiya up to 2 lakh
Lakshmiwadi Mines and Minerals up to 2 lakh
Filmedia Communication Systems up to 3 lakh
Somaiya Properties and Investments up to 1 lakh

Financial Performance

For FY24, Godavari Biorefineries reported a total revenue of Rs.1,686.67 Crore, a decrease from Rs.2,014.69 Crore in the previous year. The net profit for FY24 was Rs.12.30 Crore, compared to Rs.19.64 Crore in the previous year.

Market Potential

The demand for ethanol and bio-based chemicals is on the rise, driven by increasing environmental awareness and regulatory support for sustainable practices. Godavari Biorefineries is well-positioned to capitalize on this trend, given its extensive experience and integrated production capabilities. 

Conclusion

Godavari Biorefineries’ decision to go public and raise Rs.325 crore through its IPO reflects its growth ambitions and commitment to financial stability. The fresh issue of Rs.240 crore will primarily be utilized to reduce debt, thereby improving the company’s balance sheet. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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