Hemani Industries files for Rs.2,000 crore IPO

Amidst the uncertainty surrounding the LIC IPO, there still are a slew of IPOs that are filing their draft red herring prospectus (DRHP). The latest in the list is Hemani Industries.

The company specializes in the manufacture of agrochemicals and specialty chemicals and it is planning to raise Rs.2,000 crore via the IPO. Normally, the SEBI approval process for the DRHP takes around 2-3 months so the final approval should come in around May/June.

The total issue of Rs.2,000 crore will be divided into a fresh issue of shares to the tune of Rs.500 crore and an offer for sale (OFS) of Rs.1,500 crore.

The entire offer for sale will be by the promoters of the company. Jayesh Mohan Dama, Mohan Sunderji Dama and Minal Mohan Dama, the 3 promoters who jointly own 100% of Hemani Industries, will offload shares worth Rs.500 crore each. Hemani is also considering Rs.100 crore private placement.

While the OFS portion will give an opportunity to monetize part of their holdings, the fresh issue component will be used to bankroll some of its expansion plans.

The fresh issue proceeds will be used for capacity expansion at its plant in Saykha industrial estate in Gujarat as also for repaying debts of the parent and its crop care subsidiary. Some part of the fresh funds will also go towards working capital needs and general corporate spends.

The product focus of Hemani Industries is largely in crop protection and wood protection. In addition some of its chemicals also have veterinary, and public health applications.

In addition, Hemani is also engaged in contract research and manufacturing services (CRAMS), which is a big and lucrative opportunity for Indian pharma and chemical companies. Supply shortfalls from China have opened the doors for Indian specialty chemical companies.

According to a report by Frost and Sullivan, Hemani Industries is the largest global producer of meta phenoxy benzaldehyde (MPBD), which is a pesticide intermediate. It is also the leading producer of technical grade cypermethrin, which is a kind of pyrethroid.

Hemani predominantly exports to over 60 countries in the world with focus on regions like the Asia-Pacific, Latin America, the US, Russia, Africa and Australia. 

For FY21, Hemani Industries reported 27% higher net profits at Rs.169.40 crore while YoY sales revenues grew by 17.2% to Rs.1,172 crore, implying net profit margins (NPM) of 14.5%. The IPO will be lead managed by JM Financial and Kotak Mahindra Capital.

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