Shyam Metalics and Energy’s IPO Approval

An Overview of the Company

Shyam Metalics and Energy earlier filed a draft red herring prospectus (or DRHP) in February 2021 with the Securities and Exchange Board of India (or SEBI) which has ultimately resulted in them gaining approval to launch an initial public offering (or IPO) amounting to a value of INR 1,107 Crores.

This IPO is set to release INR 657 Crores in the form of fresh equity shares. The remaining INR 450 Crores is expected to be raised via an offer of sale. This is set to be done via the promoters and shareholders of Shyam Metalics and Energy who include Dorite Tracon, Kalpataru Housefin & Trading, Narantak Dealcomm, Subham Buildwell, Subham Capital, along with Toplight Mercantiles.

Having initiated their operations in Fiscal 2005, Shyam Metalics and Energy has continued to deliver a  positive EBITDA in each consequent fiscal.

Objectives

This IPO will be launched with an aim of keeping on hold 3 Lakh equity shares for Shyam Metalics and Energy’s employees.

The proceeds of the initial public offering are aimed at generating fresh capital such that certain borrowings made on behalf of the company and its subsidiary Shyam SEL and Power Limited can be repaid. Thus far INR 470 crore has been set aside to make these repayments in addition to handling general corporate expenses.

Financial Performance and Positions

Capital Facts – Shyam Metalics and Energy has an authorized share capital amounting to INR 290 Crores and has a total paid-up capital value amounting to INR 233,61 Crores.

Financial Performance in 2019-2020 – Shyam Metalics and Energy generated a revenue derived from its operations to an amount of INR 21,088.79 million. The net profit generated by Penna Cement amounted to INR 1053.54 million as of March 31, 2020.

Position in the industry – As per a CRISIL Report, Shyam Metalics and Energy stands as one of the biggest producers of ferro alloys in terms of its installed capacity in the country. This fact holds true as of February 2021.

Key player – As of March 2020, Shyam Metalics and Energy has been recognized as a valuable and leading player in terms of its pellet capacity. It has been recognized as the fourth largest company responsible for creating a sponge iron industry capacity within the country.

Other Pertinent Information

This isn’t the first time Shyam Metalics and Energy has attempted to launch an IPO. It previously attempted to do so in 2018. While it received clearance from the SEBI the company decided to alter its course of action and deferred this plan to the future.

Axis Capital, ICICI Securities, JM Financial, and SBI Captial Markets Limited have each been charged with being responsible for Shyam Metalics and Energy’s IPO under the role of lead managers.

Shyam Metalics and Energy has three manufacturing plants of which two are located in West Bengal and one resides in Odisha.

As of December 31, 2020, if considering their intermediate as well as final products, the total installed metal capacity of Shyam Metalics and Energy’s manufacturing plants amounts to 5.71.

Manufacturing plants owned and operated by Shyam Metalics and Energy include some of which are captive power plants. These have an installed capacity of 227 MW as of the past 5 months.

Each of their manufacturing plants has been designed to fungible thereby protecting Shyam Metalics and Energy from market volatility and allows for seamless adaptability to changing market objectives and conditions. Production and products on offer are ever-evolving keeping in mind the constant changes in market horizons. Each of these has been designed with the objective of maximizing operating margins.

Concluding Thoughts

Shyam Metalics and Energy has had a strong set of values in place including but not limited to focusing on integrity, ownership, collaboration, and commitment. Each of these factors has helped contribute to its successful growth and expansion commitments thus far.