August 22, 2015

Shree Pushkar Chemicals & Fertilisers Ltd IPO Snapshot

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\ RESEARCH
Issue Snapshot: Background & Operations:
Shree Pushkar Chemicals & Fertilisers Lt is an ISO 9001: 2008 certified company which
Issue Open: August 25 August 27, 2015 commenced its business operations in the year 1993 with a trading business and has emerged
to become one of the few manufacturers with widest range of dye intermediates in India with
Price Band: Rs. 61 65 zero waste. It has state of art integrated manufacturing facilities located at Lote Parshuram,
Maharashtra. Over the years, the integration (backward and forward) has helped it to diversify
* Issue Size: 1,07,69,231 equity shares into wide range of products in such a way that many of the intermediate products are used to
(incl offer for sale of 20,26,589 equity manufacture other value added products leading to efficiencies in the cost of production and
shares) low dependence on raw materials from external sources. SPCFL is also amongst India`s large
(*=Assuming issue subscribed at higher band) manufacturers of K-Acid, a dye intermediate used to manufacture Reactive Dyes for dying of
textiles, with an installed capacity of 960 MTPA as on March 31, 2015. It manufactures
Offer Size: Rs.70 cr
products in 4 major verticals viz., Dye Intermediates, Acid Complex (comprising sulphuric and
QIB upto 50% eq sh its derivative acids), Cattle Feed Supplement and Fertilizers (Single Super Phosphate & Soil
Retail atleast 35% eq sh Conditioner).
Non Institutional atleast 15% eq sh
SPCFL markets, sells and distributes wide range of products to its diverse customers based in
Face Value: Rs 10 India and abroad and work on two-way marketing strategy, one being direct approach to its
customers and the other through selling agents/ dealers. Its products are marketed and sold in
Book value: Rs 42.57. (Mar 31, 2015) the states of Maharashtra, Gujarat and Karnataka in India. It is also a recognised Export House
by Government of India and its products are exported to one of the worlds leading dye
Bid size: - 200 equity shares and in manufacturers viz., Huntsman Corporation, headquartered in USA as also to Archroma
multiples thereof Management LLC, a global color and speciality chemical company headquartered in
Swizterland. Besides these, it also exports to countries namely, Brazil, Thailand, Pakistan and
100% Book built Issue
Mexico. It has a total workforce of 529 including 10 senior executives, 26 managerial and
Capital Structure: * supervisory staff, 66 office staff, 125 skilled and unskilled workers, 54 contract labourers and
Pre Issue Equity: Rs. 21.47 cr 248 casual labourers.
Post issue Equity: Rs. 30.22 cr
As of March 31, 2015, Revenue from Operations increased to Rs 2,665.20 mn from Rs 1,305.74
Listing: BSE & NSE mn in fiscal 2011 at a CAGR of 19,53%. Net Profit after Tax increased to Rs 186.5 mn in FY
2014-15 from Rs 27.54 mn in FY 2010-11 at a CAGR of 61.32%. Its Revenue from Operations
Lead Manager: Keynote Corporate comprised Rs 2,026.75 mn from Dye Intermediates, Rs 103.17 mn from Acid Complex, Rs 53.41
Services Ltd mn from Cattle Feed Supplements and Rs 481.87 mn from Fertilizers.

Registrar to issue: Bigshare Services Objects of Issue:

Private Limited The Issue comprises a Fresh Issue and an Offer for Sale.
The funds from the Offer for Sale (net of Issue related expenses for the Selling Shareholders)
Shareholding Pattern shall be received by the Selling Shareholders and SPCFL shall not receive any proceeds from the
Pre issue * Post issue Offer for Sale.
Shareholding
Pattern % %
Objects of the Fresh Issue
Promoters & 84.81 60.27 Acquisition of an existing factory within MIDC Industrial Area Lote-Parshuram bearing no. B-
Promoter Group 97
Public (incl Setting up of facilities at B-97 for manufacture of
institutions & 15.19 39.73 Reactive Dyes with a capacity of 3,000 TPA
employees) H-Acid with a capacity of 750 TPA
Total 100.0 100.0 Vinyl Sulphone (VS) Ester with a capacity of 1,000 TPA
Setting up of additional effluent treatment plant at the existing facility (Unit I) to make the
(*=Assuming issue subscribed at higher band) unit a Zero Discharge unit.
Construction of additional Godown(s) at its existing facility (Unit II) for meeting the
additional storage requirements for finished goods
General corporate purposes; and
To meet the preliminary & pre-operative and Issue expenses

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Requirement of funds and Means of Finance Rs in Million
Sr No Description Amount
(Rs in mn)
1 Acquisition of an existing factory within MIDC Industrial Area Lote-Parshuram bearing no. B-97 22.9

2 Setting up of facilities at B-97 for manufacture of

- Reactive Dyes with a capacity of 3,000 TPA
415.94
- H-Acid with a capacity of 750 TPA
- Vinyl Sulphone (VS) Ester with a capacity of 1,000 TPA
3 Setting up of additional effluent treatment plant at the existing facility (Unit I) to make the unit a Zero 48.79
Discharge unit
4 Construction of additional Godown(s) at its existing facility (Unit II) for meeting the additional storage 23.76
requirements for finished goods
5 General corporate purposes; and *
6 Preliminary & pre-operative and Issue expenses *

Competitive Strengths:
One of the few integrated manufacturers of wide range of Dye Intermediates in India
One of the zero waste manufacturer in the Dye Intermediates Industry in India
Strategic location of its facilities reduces time and costs overruns
Strong marketing and distribution network
Products are catered to consumers from diverse sectors and industries
Experienced management and key management personnel

Business Strategy:
Integrate forward into manufacture of textile dyes
Continue to expand and diversify product portfolio
Pursue opportunities of inorganic growth through strategic acquisitions and partnerships
Modernization and upgradation of technology;
Capitalize by exploring new markets and enhancing existing production and customer base

Key Concerns:

SPCFL has experienced negative cash flows. Any negative cash flow in future could affect its results of operations.
There have been certain instances of delay in repayment of installments of term loans to the Bank in past.
SPCFL is in default in complying with requirement of appointing cost auditor for some years and providing a corporate guarantee in
violations of Companies Act 1956. Some of its historical, legal and secretarial records are not traceable. Non-availability of these
records exposes it to the risk of penalties that may be imposed by the competent regulatory authority in future.
Business is dependent on SPCFLs key customers and the loss of any significant customer could adversely affect its financial results.
SPCFLs agreements with certain banks and non-banking financial companies for financial arrangements contain restrictive
covenants for certain activities and if it is unable to get their approval, it might restrict its scope of activities and impede its growth
plans.
The growth of its business may require it to obtain substantial financing, which it may not be able to obtain on reasonable terms or
at all.
The industry segments in which SPCFL operates being fragmented, it faces competition from other players, which may affect its
business operations and financial conditions.
A few of the raw materials used by SPCFL at its factories are hazardous in nature. In the event of any accidents involving any such
hazardous materials and substances, SPCFL may be held liable for subsequent damages and litigations.
Fluctuations in the availability and quality of raw materials could cause delay and increase costs.
SPCFL is a labour intensive industry and hence may face labour disruptions and other planned and unplanned outages that would
interfere with its operations.

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 Business of SPCFL is dependent on its manufacturing facilities which are located in Lote Parshuram, Maharashtra. Any loss or
shutdown of operations at any of its manufacturing facilities in Maharashtra may have an adverse effect on its business and results
of operations.
Over the years SPCFL has established its sales and distribution network in domestic and international markets. It may not be able to
maintain or further develop its distribution network and under such circumstances the same can adversely affect its revenues.
SPCFL does not have long-term agreements with some of its customers which may adversely affect its results of operations
Any inability to manage SPCFLs growth could disrupt its business and reduce profitability.
Changes in the exchange rate between the Indian Rupee and the US$ may affect SPCFLs operating results.
SPCFL does not currently have any registered trademarks. Failure to protect its intellectual property rights may adversely affect its
competitive business position, financial condition and profitability.
Any changes in regulations or applicable government incentives would materially adversely affect SPCFLs operations and growth
prospects.

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services. This report is prepared in the normal course, solely upon information generally available to the public. No representation is made that it is accurate or
complete. Notwithstanding that HDFC Bank is acting for Shree Pushkar Chemicals & Fertilisers Limited this report is not issued with the authority of for Shree
Pushkar Chemicals & Fertilisers Limited. Readers of this report are advised to take an informed decision on the issue after independent verification and
analysis.

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