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Speciality chemicals firm Fine Organics files for IPO

Speciality chemicals manufacturer Fine Organics Ltd has filed its draft proposal with the Securities and Exchange Board of India to float an initial public offering. The public issue will entirely be a secondary market sale by the promoters and other selling shareholders of the company, and will consist of 7.66 million shares, representing 25% of the post-issue equity capital.

Fine Organics, which makes ingredients for the petrochemicals and food industry, is following in the footsteps of about four dozen listed peers, including Blackstone-backed SH Kelkar & Co Ltd, BASF India and Shree Pushkar Chemicals & Fertilisers.

The company’s products are used in specialty applications across end-user industries, such as food, plastics, cosmetics, textiles, paints, inks and rubber, according to its website.

The entire proceeds from the IPO will go to the selling shareholders. The company will not receive any proceeds from the offer.

JM Financial and Edelweiss Financial Services are the merchant bankers managing the IPO. Cyril Amarchand Mangaldas is the legal counsel to the company for its IPO process. Luthra & Luthra and Duane Morris & Selvam LLP are Indian and international legal counsel, respectively, to the merchant bankers.

Company

The Fine Organics group was established in 1970 by Ramesh Shah and Prakash Kamat. The company was incorporated in 2005 and started operations a year later by setting up a manufacturing facility in Mumbai. In 2011, its group company Oleofine Organics (India) Pvt. Ltd was merged with Fine Organics. The company’s manufacturing facilities are in Mumbai but it also has joint ventures in Malaysia and Thailand, as per its website. In December 2016, it launched Fine Zeelandia, a joint venture with the Netherlands-based Zeelandia.

According to its website, the firm has a research and development facility in Mumbai and recently opened an office in Belgium.

Fine Organics is the largest manufacturer of oleochemical-based additives in India and a strong player globally in the industry. It makes a wide range of speciality plant derived oleochemicals-based additives and are used in industries such as food, plastic, cosmetics, paint, ink, and coatings besides other specialty applications. The company has three production facilities — one each in Ambernath, Badlapur, and Dombivli. The cumulative installed capacity of three facilities was 64,300 tonnes per annum as of December 2017.

Fine Organics plans to set up an additional production facility at its Ambernath unit. It expects to start operations by January-March 2019.

Financials

The company reported net profit of Rs 62.58 crore for the nine months ended December 2017 on revenue (from operations) of Rs 585.17 crore for the same period, according to its draft proposal.

Its net profit for 2016-17 stood at Rs 79.47 crore on revenue of Rs 786.29 crore. The company’s net profit has risen at a compounded annual rate (CAGR) of 30.63% for five years beginning 2012-13. Its revenue from operations has grown at a compounded rate of 9.63%,

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