About the Company:
Chemcon Speciality Chemicals Ltd is a manufacturer of specialised chemicals, such as HMDS and CMIC which are predominantly used in the pharmaceuticals industry, and inorganic bromides, namely Calcium Bromide, Zinc Bromide and Sodium Bromide, which are predominantly used as completion fluids in the oilfields industry.
Company is the only manufacturer of HMDS in India and were the third largest manufacturer of HMDS worldwide in terms of production in the calendar year 2019.
Company was the largest manufacturer of CMIC in India and the second largest manufacturer of CMIC worldwide, in terms of production and capacity in calendar year 2019.
Further, Company was the only manufacturer of Zinc Bromide and the largest manufacturer of Calcium Bromide in India, in terms of production in calendar year 2019.
Company supplies its products to domestic customers and also export our products to countries including United States of America , Italy, South Korea, Germany, People’s Republic of China, Ja pan, United Ara b Emirates, Serbia, Russia, Spain, Thailand and Malaysia.
In Fiscals 2020, 2019 and 2018, Company’s revenue from exports contributed 39.78%, 31.99% and 47.84%, respectively of our revenue from operations.
Company’s revenues from exports (including Deemed Exports) have grown at a CAGR of 17.57% between Fiscals 2018 and 2020.
Company’s manufacturing facility is located at Manjusar near Vadodara in Gujarat.
Key customers for Pharmaceutical Chemicals include:
- Hetero Labs Ltd.
- Laurus Labs Ltd.
- Aurobindo Pharma Ltd.
- Sanjay Chemicals (India) Private Ltd.
- Ind -Swift Laboratories Ltd.
- Vivin Drugs & Pharmaceuticals Ltd.
- Macleods Pharmaceuticals Ltd.
Key customers for Oilwell Completion Chemicals include:
- Shree Radha Overseas.
- Water Systems Specialty Chemical DMCC.
- CC Gran Limited Liability Company.
Percentage Wise Revenue: (Fiscal 2020)
- Pharmaceutical Chemicals, contributed 63.75%,
- Oilwell Completion Chemicals, contributed 33.47%.
Percentage Wise Revenue from Top 5 Customers:
Management Team:
- Mr. Kamalkumar Rajendra Aggarwal (Designation: Chairman and Managing Director)
- Mr. Rajesh Chimanlal Gandhi (Designation: Whole-time Director and Chief Financial Officer)
Objectives of the Issue:
Offer for Sale: (Rs. 135 cr)
- Company will not receive any proceeds from the Offer for Sale. The Selling Shareholder will be entitled to their respective portion of the proceeds of the Offer for Sale, net of their respective portion of the Issue related expenses.
Fresh Issue: (Rs.165 cr)
- Capital expenditure towards expansion of our Manufacturing Fa cility (“Project”).
- To meet working capital requirements.
- General corporate purposes.
Positives for the Company:
Leading Manufacturer globally of the Pharmaceutical Chemicals and the Oilwell Completion Chemicals.
- Company is the only manufacturer of HMDS in India and were the third largest manufacturer of HMDS worldwide in terms of production in calendar year 2019.
- Chemcon Speciality Chemicals were the largest manufacturer of CMIC in India and the second largest manufacturer of CMIC worldwide, in terms of production and capacity in calendar year 2019.
Market Leader in the Segment.
- Chemcon Speciality Chemicals is the only manufacture of Zinc Bromide and the largest manufacturer of Calcium Bromide in I ndia, in terms of production in calendar year 2019.
Diversified Customer Base.
- Company supplies its products to customers in India and also export our products to countries including United States of America, Germany, Italy, South Korea, People’s Republic of China, Ja pan, United Arab Emirates, Serbia, Russia, Spain, Thailand and Malaysia.
- In Fiscals 2020, 2019 and 2018, our exports contributed 39.78%, 31.99% and 47.84% respectively of our total revenue from operations. Our revenue from exports have grown at a CAGR of 17.57% between Fiscals 2018 and 2020.
Good Relationship with Key Customers.
- Company has established relationships with key customers. For instance, we conduct business with Aurobindo Pharma Limited on the basis of purchase orders and they have been our client for over 20 years.
- Around 68.61% of our total revenue from operations in Fiscal 2020 was contributed by customers who have been consistently purchasing our products over the last five years. Our top seven customers for Fiscal 2020 have been our customers for over four years.
Specialty chemicals industry in which Chemcon Speciality Chemicals operate has High Entry barriers.
- The specialty chemicals industry in which we operate has high entry barriers due to inter alia: (a) the involvement of complex chemistry in the manufacture of our Products, which is difficult to commercialize on a large scale and
- (b) a long gestation period to be enlisted as a supplier with the customers, particularly with the customers of our Pharmaceutical Chemicals.
Expansion of Installed Production capacity.
- Company aims to expand our manufacturing operations and production capacity. Currently company has seven operational individual plants for the production of our Products, within the Manufacturing Facility. Our total volumetric reactor capacity as on July 31, 2020 was 374.85 KL.
- Company intends to build two additional plants with a total volumetric reactor capacity of 251.00 KL. These additional plants shall be utilised for the manufacturing of chemicals which are principally used pharmaceutical industry.
- With the completion of such expansion, our total volumetric reactor capacity at the Manufacturing Facility shall increase from our volumetric reactor capacity of 374.85 KL to 625.85 KL and will enable us to significantly benefit from economies of scale.
The China Angle.
- India is currently a net importer of HMDS, with about 40% of India’s current domestic demand being catered by imports majorly from China and Germany. India is expected to witness a demand growth for HMDS of 10.6% CAGR between 2019 and 2023.
- Further, India and China are the only countries that produce CMIC. India is a net importer of CMIC, with about 62% of India’s current domestic demand being catered to by imports majorly from China.
- The trade dispute between the USA and China, may influence China’s HMDS exports to the USA and may indirectly help India boost its exports and Company has already started the supply of HMDS to the customers in the USA based on the opportunity created due to such trade dispute.
Financials of the Company:
| (in Crores) | FY 18 | FY 19 | FY 20 |
|---|---|---|---|
| Revenue | 158.3 | 305.3 | 266.0 |
| Net Profit | 26.3 | 43.0 | 48.8 |
Valuation of Peer Group Companies:
| Company Name | Face Value | EPS | PE Ratio | RoNW | NAV |
|---|---|---|---|---|---|
| Chemcon Speciality Chemicals Ltd | 10 | 15.7 | 22.12 | 34.23% | 44.91 |
| Aarti Industries Ltd | 5 | 30.04 | 32.96 | 18.04% | 166.55 |
| Vinati Organics Ltd | 1 | 32.48 | 30.11 | 26.09% | 124.48 |
| Paushak Limited | 10 | 113.27 | 31.23 | 15.36% | 737.29 |
| Fine Organic Industries Ltd | 5 | 54.31 | 38.67 | 26.40% | 205.73 |
| Neogen Chemicals Ltd | 10 | 12.33 | 43.71 | 18.36% | 67.17 |
IPO Details:
| Details | Info |
|---|---|
| Issue Opens on | 21st September 2020 |
| Issue Closes on:. | 23rd September 2020 |
| Issue Price | Rs.338 – 340 |
| Face Value | Rs.10 |
| Minimum Lot | 44 Shares |
| Minimum Investment | Rs.14,960 |
| Retail Category Allocation | 35% |
| Issue Constitutes | 26.82% |
| Issue Size | Rs.340 cr ($46 million) |
| Market Cap | Rs.1267 cr ($171 million) |
| Listing at | NSE & BSE |
| Equity Shares Offered (OFS) | 45,00,000 |
| Equity Shares Offered (Fresh) | 55,00,000 |
| Total Equity Shares Offered (OFS + Fresh) | 1,00,00,000 |
| Equity Shares Prior to the Issue | 3,17,77,760 |
| Equity Shares after the Issue | 3,72,77,760 |
Important Dates:
| Finalization of Basis of Allotment | on or Before 28th September 2020 |
| Initiation of Refunds | on or Before 29th September 2020 |
| Credit of Equity Shares: | on or Before 30th September 2020 |
| Listing Date: | on or Before 1st October 2020 |
Subscription Details: (Will be Updated)
| (Subscription-Category-Wise (no. of times) Till time : 5:00 PM) | Shares Offered | Day-1 | Day-2 | Day-3 |
|---|---|---|---|---|
| QIB | 18,68,344 | 0.00 | 1.37 | 113.5 |
| NII | 14,07,249 | 1.24 | 3.50 | 449.14 |
| Retail | 32,83,580 | 9.83 | 22.94 | 40.31 |
| Employee | —– | — | —- | —- |
| TOTAL | 65,59,173 | 5.19 | 12.62 | 148.9 |
IPO Valuation Parameters:
| Earnings Per Share (EPS) | Price To Earnings ratio (PE) | Return on Net Worth (RoNW) | Net Asset Value (NAV) |
|---|---|---|---|
| 15.37 | 22.12 | 34.23% | 44.91 |
| Check IPO Allotment Status: |
|---|
Link InTime Website https://linkintime.co.in/PublicIssue/BSE IPO Website: https://www.bseindia.com/IPO/Allotment |
| Company Contact Info: |
|---|
| Chemcon Speciality Chemicals Limited Block Number 355, Manjusar Kunpad Road Manjusar Village, Taluka Savli Vadodara 391 775, Gujarat Telephone: +91 98795 64107 E-mail: investor.relations@cscpl.com Website: www.cscpl.com |
| IPO Registrar Info: |
|---|
| Link Intime India Private Limited C-101, First Floor, 247 Park Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai 400 083 Tel: +91 22 4918 6200 Email: chemcon.ipo@linkintime.co.in Investor grievance email: chemcon.ipo@linkintime.co.in Website: www.linkintime.co.in |
