About the Company:
Fine Organic Industries Ltd is the largest manufacturer of oleochemical-based additives in India and a strong player globally in this industry.
They produce a wide range of specialty plant derived oleochemicals-based additives used in the food, plastic, cosmetics, paint, ink, coatings and other specialty application in various industries.
Company has a dedicated research and development (“R&D”) centre located in Mahape, Navi Mumbai.
As at December 31, 2017, they had a range of 387 different products sold under the ‘Fine Organics’ brand. Fine Organics is the first company to introduce slip additives in India and are the largest producer of slip additives in the world.
Company has 603 direct customers (i.e., end-users of their products) and 127 distributors (who sold their products to more than 5,000 customers) from 67 countries.
Company’s plastics additives and specialty additives are also used in the packaging of foods and other fast moving consumer goods.
Manufacturing plant-based additives from base oleochemicals is a highly specialised process. Hence, many of these additives are specialty products, and this industry enjoys premium margins with only a few players dominating the industry globally.
Proprietary technology to manufacture these specialty additives is available with only a few global players. Fine Organics is one of the leading players that developed proprietary technologies to manufacture these green additives.
Currently they have three production facilities: one in Ambernath, Badlapur & Dombivli (Maharashtra). As at December 31, 2017, these three facilities have a combined installed capacity of approximately 64,300 tonnes per annum.
Company’s Current Manufacturing Facilities & Their Installed Capacities.
Company’s Export & Domestic Revenue Mix:
Company’s Diversification Plans:
Company is planning to diversify and strengthen their business by manufacturing and distributing premixes for bakery and confectionary products and pan release agents.
Fine Zeelandia Private Limited (“Fine Zeelandia”), a Joint venture company in which company will have a 50% equity interest, is in the process of setting up a new manufacturing facility in Patalganga to manufacture these products.
This new facility has a planned initial installed capacity of 10,000 tonnes per annum. They expect it to commence operations in the first quarter of Fiscal 2019.
Company’s Expansion Projects in India:
Company is currently planning to set up an additional production facility in Ambernath with a planned installed capacity of 32,000 tonnes per annum .They expect it to commence operations in the fourth quarter of Fiscal 2019.
They are also in the preliminary stages of planning the development of additional production facilities in Patalganga (Maharashtra) with a planned initial installed capacity of approximately 10,000 tonnes per annum.
Company’s Expansion Project in Germany.
In addition, they are currently planning to set up a new production facility in Leipzig, Germany with a planned initial installed capacity of 10,000 tonnes per annum.
This facility will be owned and operated by a joint venture company (which they plan to name FineAdd Ingredients GmbH, (“Fineadd”)), in which Company will have 50% equity interest.
Company expects the German Facility to commence operations by the third quarter of Fiscal 2020.
Company’s Expansion into China.
Company is in the process of establishing a wholly-owned subsidiary in China and are in the process of opening a sales office in Shanghai.
Given that most of their potential direct customers in China are large petrochemical companies many of which are state-owned, Company’s sales offices in China will allow them to maintain a presence closer to these large direct customers to help secure their business and, if necessary, modify their products to meet their specifications.
Main Global Competitors for the Company:
Management Team:
- Mr. Prakash Damodar Kamat (Designation: Executive Director and Chairman)
- Mr. Mukesh Maganlal Shah (Designation: Managing Director)
- Mr. Jayen Ramesh Shah (Designation: Executive Director and Chief Executive Officer)
Special Thanks: We would like to thank the Board of Directors of Fine Organic Industries Ltd for inviting Markets Guruji Team to the IPO Press Conference & Listing Ceremony.
Positives For the Company:
Largest Producer of Oleochemical-based Additives in India.
Company is the largest manufacturer of oleochemical-based additives in India and one of the few large players in global oleochemical-based additives industry.They are one of six global players in the food additives industry and one of five global players in the plastic additives industry.
Company has a huge first-mover advantage in India, alongside various other competitive advantages over other global players. This gives Company an advantage in pricing products competitively and allows them to provide stiff competition to new players. Hence, no major domestic or global player has set up a manufacturing facility in India.
Specialised Business Model with High Entry Barriers.
There are multiple entry barriers for a new entrant in the global oleochemical-based additives industry, such as product formulations, process technology and customer stickiness to established players. As a result, they are one of the few large global players in this industry.
Because of high Entry barriers, Company is able to obtain higher EBITDA and profit margins for their products compared to other manufacturing industries where barriers to entry are lower.
Company’s EBITDA margins were 18.54%, 22.11%, 18.43% and 17.78% for Fiscals 2015, 2016, 2017 and the nine months ended December 31, 2017, respectively.
Diversified Customer Base with Long Term Relationships with Marquee Customers.
Company has 603 direct customers and 127 distributors (who sold than more than 5,000 customers). Company’s direct customers are multinational, regional and local players manufacturing consumer products, such as Hindustan Unilever and Parle Products, and petrochemical companies and polymer producers globally.
Company has an extensive distribution network in India and worldwide, enabling their products to be sold in 67 countries.
Diversified Product Portfolio Catering to a Variety of High Growth Industries.
As at December 31, 2017, they had a range of 387 products sold under the ‘Fine Organics’ brand, used in the (a) plastic industry and (b) food industry and others (cosmetics, printing inks, coated papers, lube additives, wires and cables, coatings and other specialty applications) industries.
Peer group Comparison:
There are no comparable listed peers in India. Accordingly, it is not possible to provide an industry comparison in relation to Fine Organic Industries Ltd.
Financials of the Company: (Consolidated)
| (in Crores) | FY 13 | FY 14 | FY 15 | FY 16 | FY 17 | 31st Dec 17 |
|---|---|---|---|---|---|---|
| Revenue | 497.51 | 574.18 | 616.51 | 667.65 | 792.66 | 594.71 |
| Net Profit | 20.89 | 61.74 | 57.0 | 76.19 | 77.67 | 58.54 |
IPO Details:
| Details | Info |
|---|---|
| Issue Opens on | 20th June 2018 |
| Issue Closes on:. | 22nd June 2018 |
| Issue Price | Rs.780 – 783 |
| Face Value | Rs.5 |
| Minimum Lot | 19 shares |
| Minimum Investment | Rs.14,877 |
| Issue Constitutes | 25.00% |
| Issue Size | Rs.600.16 cr |
| Market Cap | Rs.2400 cr |
| Listing at | NSE & BSE |
| Equity Shares Offered (OFS) | 76,64,994 |
| Equity Shares Prior to the Issue | 3,06,59,976 |
| Equity Shares after the issue | 3,06,59,976 |
Important Dates:
| Finalization of Basis of Allotment | on or before 27th June 2018 |
| Initiation of Refunds | on or before 28th June 2018 |
| Credit of Equity Shares: | on or before 28th June 2018 |
| Listing Date: | on or before 2nd July 2018 |
Subscription Details:
| (Subscription-Category-Wise (no. of times) Till time : 06:00 PM) | Shares Offered | Day-1 | Day-2 | Day-3 |
|---|---|---|---|---|
| QIB | 15,32,999 | 0.17 | 0.64 | 12.85 |
| NII | 11,49,750 | 0.005 | 0.046 | 21.01 |
| Retail | 26,82,748 | 0.13 | 0.40 | 1.49 |
| Employee | ———- | —– | —- | —- |
| TOTAL | 53,65,497 | 0.12 | 0.40 | 8.92 |
IPO Valuation Parameters: (Consolidated)
| Earnings Per Share (EPS) | Price To Earnings ratio (PE) | Return on Net Worth (RoNW) | Net Asset Value (NAV) |
|---|---|---|---|
| 25.33 | 30.91 | 26.51% | 95.57 |
| Check IPO Allotment Status: |
|---|
Karvy Website (Click on the below link)http://kosmic.karvy.com:81/ipotrack/ |
Grey Market Premium :
| Date | IPO | Price Band | Grey Market premium | Kostak Rates |
|---|---|---|---|---|
| 13/03/18 | Fine Organic Ltd | 780 – 783 | 44 – 48 | 750 – 800 |
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| Company Contact Info: |
|---|
| Fine Organic Industries Limited Fine House Anandji Lane Ghatkopar (East) Mumbai 400 077 Tel: (91 22) 2102 5000 Fax: (91 22) 2102 8899 E-mail: investors@fineorganics.com Website: www.fineorganics.com |
| IPO Registrar Info: |
|---|
| Karvy Computershare Private Limited Karvy Selenium, Tower B Plot number 31 & 32 Gachibowli Financial District Nanakramguda Hyderabad 500 032 Tel: (91 40) 6716 2222 Fax: (91 40) 2343 1551 E-mail: einward.ris@karvy.com Investor grievance e-mail: foil.ipo@karvy.com Website: https://karisma.karvy.com |
