About the Company:
Chemplast Sanmar Ltd is primarily engaged in the manufacturing and sales of specialty chemicals such as specialty paste PVC resin as well as starting materials and intermediates for pharmaceutical, agro-chemical and fine chemical sectors as part of its custom manufacturing operations.
In addition, CSL also manufactures and sells other chemicals, namely, caustic soda, chloromethanes, refrigerant gas and hydrogen peroxide.
Company’s Business:
- Specialty paste PVC resin.
- Custom Manufacturing Business.
- Chloromethanes.
- Caustic soda.
- Hydrogen Peroxide.
- Suspension PVC resin.
Specialty paste PVC resin Business.
Specialty paste PVC resin is primarily used by end-user industries to produce, among other things, artificial leather, tarpaulin, gloves, conveyor belts and coated fabrics. Company started manufacturing specialty paste PVC resin in Financial Year 1968.
Custom Manufacturing operations.
Company custom manufactures starting materials and intermediates for multinational innovator companies in the agrochemical, pharmaceutical and fine chemicals industry.
Caustic soda.
Caustic soda is used by various industries such as textiles, paper and pulp, water treatment, alumina, organic chemicals, inorganic chemicals, pharmaceuticals, soaps and detergents and chlorinated paraffin wax. Company started manufacturing caustic soda in Financial Year 1989.
Chloromethanes.
It is primarily used as raw material in cypermethrin, an insecticide and as raw material in new generation refrigerants, namely hydrofluoro olefins. Company started manufacturing chloromethanes in Financial Year 1989.
Refrigerant Gas.
Refrigerant gas is primarily used as a cooling agent in air-conditioning systems.
Hydrogen peroxide.
Hydrogen peroxide is primarily used for textile bleaching, paper and pulp bleaching, and water treatment. Company started manufacturing hydrogen peroxide in Financial Year 2020.
Suspension PVC resin.
Suspension PVC resin is a grade of PVC that is primarily used by end-user industries to produce pipes and fittings, films and sheets, window and door profiles, wires and cables.
Realization for each of the products for the periods indicated: (in Rs./MT)
Parent Company:
Company is a part of the SHL Chemicals Group, which in turn is a constituent of the Sanmar Group, one among the oldest and most prominent corporate groups in South
India.
Fairfax India Holdings Corporation (“Fairfax”), a well-known international investor led by Mr. Prem Watsa, based in Canada, has invested, through FIH Mauritius Investments Limited, in the SHL Chemicals Group since 2016.
Company’s Manufacturing Facilities:
Company has four manufacturing facilities, of which three are located in Tamil Nadu at Mettur (“Mettur Facility”), Berigai (“Berigai Facility”) and Cuddalore (“Cuddalore Facility”), and one is located in Puducherry at Karaikal (“Karaikal Facility”).
Undergoing Expansion projects.
Going forward, company is proposing to expand the operations by
- Increasing the installed production capacity of specialty paste PVC resin by 35 kt;
- Setting up a multipurpose facility with two blocks for our custom manufacturing operations.
- Increasing the installed production capacity of suspension PVC resin by 31 kt by de-bottlenecking the suspension PVC resin plant.
Company also intend to improve the operational efficiencies in the manufacturing process at the Karaikal Facility by de-bottlenecking the caustic soda plant.
To minimize any market disruption from this additional production capacity, these expansions have been well planned, and will be rolled out gradually according to company’s strategic business plan between Financial Years 2022 and 2025.
Company has committed capital expenditure outlay of Rs.619 crores for these expansion activities.
Did you know?
- Chemplast Sanmar Ltd is the largest manufacturer of specialty paste PVC resin in India, on the basis of installed production capacity as of December 31, 2020.
- Company is also the third largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide, each in South India, on the basis of installed production capacity.
- Company is also one of the oldest manufacturers in the chloromethanes market in India.
Acquisition of Chemplast Cuddalore Vinyls Ltd (CCVL).
Pursuant to the CCVL Acquisition, company acquired 100.0% equity interest in CCVL that is the second largest manufacturer of suspension PVC resin in India and the largest manufacturer in South India, on the basis of installed production capacity as of December 31, 2020.
Management Team:
- Mr. Vijay Sankar (Designation: Chairman and Non – executive Director)
- Mr. Ramkumar Shankar (Designation: Managing Director)
Objectives of the Issue:
Offer for Sale: (Rs. 2550 cr)
- Company will not receive any proceeds from the Offer for Sale and the proceeds received from the Offer for Sale.Each of the Selling Shareholders will be entitled to the proceeds of the Offer for Sale.
Fresh Issue: (Rs. 1300 cr)
- Early redemption of NCDs issued by the Company, in full (“NCD Redemption”).
- General corporate purposes.
Positives for the Company:
Currently Specialty paste PVC resin demand is met by imports.
Approximately 45% of demand in India for specialty paste PVC resin is being met by imports.
CSL is the largest manufacturer of specialty paste PVC resin in India, on the basis of installed production capacity as of December 31, 2020, and catered to 45.0%, of the demand for specialty paste PVC resin in India in Financial Years 2020, with 82.0% market share of the specialty paste PVC resin sold in India.
However, no new manufacturers have entered the specialty paste PVC resin market in several years largely on account of lack of availability of raw material and technology.
Accordingly, high barriers to entry and limited competition is expected to benefit existing manufacturers of specialty paste PVC resin in India in the medium term.
Leadership Position in an Industry with High Barriers to Entry.
- CSL is a leading specialty chemicals manufacturer in India with focus on specialty paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.
- Company is the largest manufacturer of specialty paste PVC resin in India, on the basis of installed production capacity as of December 31, 2020.
- In addition, CSL is also the third largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide, each in South India, on the basis of installed production capacity as of December 31, 2020 and one of the oldest manufacturers in the chloromethanes market in India.
Second largest manufacturer of suspension PVC resin in India.
- Pursuant to the CCVL Acquisition, company acquired 100.0% equity interest in CCVL that is the second largest manufacturer of suspension PVC resin in India and the Largest manufacturer in South India, on the basis of installed production capacity as of December 31, 2020.
Undergoing Expansion for Future Growth.
- Company had incurred significant capital expenditure to develop the specialty paste PVC resin manufacturing facility and intend to further invest Rs.256 crores by Financial Year 2024 to further enhance the manufacturing capacity.
- Further, company had invested Rs.113 crores in Financial Year 2020 to purchase plant, machinery and technology for the hydrogen peroxide plant.
- Company believes that these investments will help company to capture future market growth and to remain an industry leader.
Financials of the Company:
| (in Crores) | FY 18 | FY 19 | FY 20 | FY 21 |
|---|---|---|---|---|
| Revenue | 3152.5 | 1266.7 | 1265.5 | 3815.1 |
| Net Profit | 257.2 | 1210.2 | 50.2 | 410.2 |
Valuation of Peer Group Companies:
| Company Name | Face Value | EPS | PE Ratio | RoNW | NAV |
|---|---|---|---|---|---|
| Chemplast Sanmar Ltd | 5 | 30.60 | 17.67 | N.A | (-139.15) |
| PI Industries Ltd | 1 | 33.08 | 77.58 | 17.62% | 187.61 |
| Finolex Industries Ltd | 10 | 26.81 | 28.03 | 16.75% | 160.04 |
| Navin Fluorine International Ltd | 2 | 82.53 | 40.55 | 28.93% | 11.73 |
IPO Details:
| Details | Info |
|---|---|
| Issue Opens on | 10th August 2021 |
| Issue Closes on:. | 12th August 2021 |
| Issue Price | Rs.530 – 541 |
| Face Value | Rs. 5 |
| Retail Category Allocation | 10% |
| Minimum Lot | 27 Shares |
| Minimum Investment | Rs.14,607 |
| Issue Constitutes | 45% |
| Issue Size | Rs.3850 cr ($520 million) |
| Market Cap | Rs. 8553 cr ($1.15 billion) |
| Listing at | NSE & BSE |
| Equity Shares Offered (Fresh) | 2,40,29,575 |
| Equity Shares Offered (OFS) | 4,71,34,936 |
| Equity Shares Offered (Fresh + OFS) | 7,11,64,511 |
| Equity Shares Prior to the Issue | 13,40,80,000 |
| Equity Shares after the issue | 15,81,09,575 |
Also Read : List of Upcoming IPO’s in India.
Important Dates:
| Finalization of Basis of Allotment | On or Before 18th August 2021 |
| Initiation of Refunds | On or Before 20th August 2021 |
| Credit of Equity Shares: | On or Before 23rd August 2021 |
| Listing Date: | On or Before 24th August 2021 |
Subscription Details: (Will be Updated)
| (Subscription-Category-Wise (no. of times) Till time : 06:00 PM) | Shares Offered | Day-1 | Day-2 | Day-3 |
|---|---|---|---|---|
| QIB | 2,17,92,453 | 0.00 | 0.02 | 2.70 |
| NII | 1,08,96,226 | 0.03 | 0.06 | 1.03 |
| Retail | 72,64,150 | 0.84 | 1.29 | 2.29 |
| Employee | ———- | —— | —- | — |
| TOTAL | 3,99,52,829 | 0.16 | 0.26 | 2.17 |
IPO Valuation Parameters:
| Earnings Per Share (EPS) | Price To Earnings ratio (PE) | Return on Net Worth (RoNW) | Net Asset Value (NAV) |
|---|---|---|---|
| 30.60 | 17.67 | N.A | (-139.15) |
| Check IPO Allotment Status: |
|---|
KfinTech Website: http://kfintech/IPO/Allotment_StatusBSE IPO Website: https://www.bseindia.com/IPO/Allotment |
| Company Contact Info: |
|---|
| Chemplast Sanmar Limited 9, Cathedral Road, Chennai – 600086, Tamil Nadu, India Tel: + (91) 44 2812 8500 Fax: + (91) 44 2811 2627 E-mail: grd@sanmargroup.com Website: www.chemplastsanmar.com |
| IPO Registrar Info: |
|---|
| Kfin Technologies Private Limited Selenium, Tower B, Plot No- 31 and 32, Financial District, Nanakramguda, Serilingampally Hyderabad, Rangareddi 500 032 Telangana, India Tel: +(91) 40 6716 2222 E-mail: chemplast.ipo@kfintech.com Website: www.kfintech.com |
