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Archean Chemical Industries plans to raise Rs 1,462.31 crore through an initial public offering. The subscription for the IPO opens on November 9 and closes on November 11, 2022. The price band is fixed at Rs 386-407 per equity share.
The IPO comprises of fresh issue of shares worth Rs 805 crore and Offer For Sale (OFS) of 1.615 crore shares worth up to Rs 657.31 crore. The face value is set at Rs 2 apiece.
Company Summary
Archean Chemical Industries is a leading specialty marine chemical manufacturer in India and focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers across the world. According to Frost & Sullivan, the company is the largest exporter of bromine and industrial salt by volume in India in fiscal 2021 and has the lowest cost of production globally in both bromine and industrial salt.
The company produces their products from their brine reserves in the Rann of Kutch, located on the coast of Gujarat. The company manufactures their products at their facility near Hajipir in Gujarat. As of June 30, 2022, the company has marketed their products to 18 global customers spread across 13 countries as well as 24 domestic customers.
The company’s facility, its surrounding salt fields and brine reservoirs span approximately 240 sq.km. As of June 30, 2022 , the company’s manufacturing facility had an installed capacity of 28,500 MT per annum of bromine, 30 lakh MT per annum of industrial salt and 1.3 lakh MT per annum of sulphate of potash.
The bromine produced by Archean Chemical is used as key initial level materials with applications in the pharmaceutical industry, agrochemicals, water treatment, flame retardant, additives, oil & gas and energy storage batteries. Industrial salt is an important raw material used in chemical industry for production of sodium carbonate (soda ash), caustic soda, hydrochloric acid, chlorine, bleaching powders, chlorates, sodium sulphate (salt cake) and sodium metal.
Archean Chemical is an export-oriented business and its revenue from export sales stood at 66.74% and 70.32% for the quarter ended June 2022 and in fiscal 2022, respectively. The key geographies to which the company exports their products include China, Japan, South Korea, Qatar, Belgium and the Netherlands. Some of their major customers include Sojitz Corporation Shandong Tianyi Chemical Corporation, Unibrom Corporation, Wanhau Chemicals and Qatar Vinyl Company Limited.
Company Strengths
- The company is one of the leading speciality marine chemical manufacturers in India. It was the largest exporter of bromine and industrial salt by volume among Indian companies in fiscal 2021, according to its red herring prospectus.
- Established infrastructure and integrated production with efficient cost management.
- The company’s leadership position and low cost-production offers them competitive advantages such as product pricing, economies of scale, strong customer loyalty and expansion of their client base.
- Long-standing relationship with global customers.
- Proven business model in the speciality marine chemicals industry which has high entry barriers.
- The company has built and expanded its business organically and have demonstrated consistent growth in terms of revenues and profitability.
- Experienced management team, promoters, financial investors and stakeholders.
Company Financials
Period | 3MFY23 | FY22 | FY21 | FY20 |
Total Assets (Rs in crore) | 1,606.65 | 1,529.68 | 1432.43 | 1,428.62 |
Total Revenue (Rs in crore) | 408.82 | 1,142.83 | 754.79 | 617.01 |
Profit After Tax (Rs in crore) | 84.41 | 188.58 | 66.61 | -36.22 |
EBITDA (Rs in crore) | 169.61 | 479.54 | 276.25 | 156.83 |
EBITDA margin (%) | 42.37 | 42.42 | 37.29 | 25.79 |
ROCE (%) | 11.71 | 34.62 | 21.01 | 11.24 |
ROE (%) | 27.83 | 113.11 | 169.98 | -149.8 |
Purpose of the IPO
- The purpose of Offer for Sale (OFS) is to allow the selling shareholders to sell up to 1,61,50,000 equity shares and the net proceed from the offer for sale will go to the selling shareholders.
- The net proceeds from fresh issue will be utilised by the company for redemption or earlier redemption, in part or full, of NCDs issued by the company totalling up to Rs 644 crore.
- General corporate purposes.
Company Promoters
Chemikas Speciality LLP, Ravi Pendurthi and Ranjit Pendurthi are the company promoters.
IPO Details
IPO Subscription Opening Date | November 9, 2022 |
IPO Subscription Closing Date | November 11, 2022 |
Face Value | Rs 2 per share |
Price Band | Rs 386 to Rs 407 per share |
Lot Size | 36 Shares |
Issue Size | Rs 1,462.31 crore |
Fresh Issue | Rs 805.00 crore |
Offer for Sale | 1,61,50,000 shares aggregating up to Rs 657.31 crore |
Issue Type | Book Built Issue IPO |
Listing At | BSE, NSE |
IPO Lot Size
Application | Lots | Shares | Amount |
Retail (Minimum) | 1 | 36 | Rs 14,652 |
Retail (Maximum) | 13 | 468 | Rs 1,90,476 |
Small HNI (Minimum) | 14 | 504 | Rs 2,05,128 |
Large HNI (Minimum) | 69 | 2,484 | Rs 10,10,988 |
Allotment Date
Timeline | Date |
Allotment of shares | November 16, 2022 |
Initiation of refunds | November 17, 2022 |
Credit of shares to demat account | November 18, 2022 |
Listing date | November 21, 2022 |
To know your allotment, click here