About the Company:
JG Chemicals Ltd is India’s largest zinc oxide manufacturer in terms of production and revenue for zinc oxide.
Company manufactures zinc oxide through French process, which is the dominant production technology for producing zinc oxide and has been adopted by all the major producers in Americas, Europe and Asia.
Company has a market share of around 30% and sells over 80 grades of zinc oxide and are among the top ten manufacturers of zinc oxides globally.
Since incorporation in 2001, Company has expanded the business and scale of operations and have grown into a large, diversified zinc oxide player with a global footprint.
Company’s product caters to a wide spectrum of industrial applications, including in the rubber (tyre & other rubber products), ceramics, paints & coatings, pharmaceuticals & cosmetics, electronics & batteries, agro-chemicals & fertilizers, speciality chemicals, lubricants, oil & gas and animal feed.
Over the last three years, company has marketed and sold products to over 200 domestic customers and over 50 global customers in more than 10 countries.
In India, tyre industry accounts for 70% of rubber consumption and the companies in the tyre industry are the largest consumers of zinc oxide.
Company is suppliers to 9 out of top 10 global tyre manufacturers and to all of the top 11 tyre manufacturers in India, company also supplies to leading paints manufacturers, footwear players and cosmetics players in India.
Company’s Material Subsidiary, BDJ Oxides is the only zinc oxide manufacturing facility in India to have an IATF certification, which is preferred by tyre manufacturers supplying to original equipment manufacturers
Company’s Customers:
Company sells over 80 grades of zinc oxide in domestic as well as international market and have a wide customer base in the field of rubber (tyre & other rubber products), ceramics, paints & coatings, pharmaceuticals & cosmetics, electronics & batteries, agro-chemicals & fertilizers, speciality chemicals, lubricants, oil and gas and animal feed.
Over the last three years, company has marketed and sold products to over 50 global customers in more than 10 countries and to over 200 domestic customers.
Percentage of Company’s sales to the various end-use industries:
Company’s Installed Capacity:
Company’s Manufacturing Facilities:
- Company has three manufacturing facilities located at (i) Jangalpur (Kolkata, West Bengal); (ii) Belur (Kolkata, West Bengal); and (iii) Naidupeta (Nellore District, Andhra Pradesh).
- All three manufacturing facilities have been accredited with ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015.
- With an intention to supply to customers in the European Union, company has also obtained the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) certification which allows company to supply products to the European Union.
Management Team:
- Mr. Suresh Jhunjhunwala (Designation: Executive Chairman and Whole-time Director)
- Mr. Anirudh Jhunjhunwala (Designation: Managing Director and CEO)
Objectives of the Issue:
Offer For Sale (OFS): (Rs.86.19 cr)
- Company will not receive any proceeds from the Offer for Sale. The proceeds of the Offer for Sale will be received by the Promoter Selling Shareholder and will not form part of the Net Proceeds.
Fresh Issue: (Rs.251 cr)
- Investment in our Material Subsidiary, viz. BDJ Oxides (i) repayment or pre-payment, in full or in part, of all or certain borrowings availed by our Material Subsidiary; (ii) funding capital expenditure requirements for setting up of a research and development centre situated in Naidupeta, Andhra Pradesh (“R&D Centre”) and (iii) funding its long-term working capital requirements.
- Funding long-term working capital requirements of our Company.
- General corporate purposes.
Fund Utilization:
| Particulars | Amount (Rs. in Crores) |
|---|---|
| Investment in our Material Subsidiary, viz. BDJ Oxides: | |
| (1) repayment or pre-payment, in full or in part, of all or certain borrowings availed by our Material Subsidiary; |
25 cr |
| (2) funding capital expenditure requirements for setting up of R&D Centre. | 6.05 cr |
| (3) funding its long-term working capital requirements. | 60 cr |
| (4) Funding long-term working capital requirements of our Company | 35 cr |
Positives for the Company:
High Entry Barriers in key end-use industries.
- As a manufacturer of zinc oxide, it is a pre-requisite in most of our end-use industries for our products to be customised according to the specifications by customers, which usually acts as a significant entry barrier.
- Further, high cost of product development, complexity of the chemistry involved in innovating and tailoring our products to the customised needs of our customers, which requires necessary technical expertise and lengthy and stringent supplier qualification process are the other entry barriers in the business.
Leading market position with a diversified customer base.
- Company is the largest manufacturer of zinc oxides in India and among the top ten manufacturers of zinc oxides globally, with an installed capacity of 59,904 MTPA for zinc oxide, 7,056 MTPA for zinc ingots and 10,080 MTPA capacity for zinc sulphate and other allied chemicals.
- Company’s products cater to a wide spectrum of industrial application including rubber (tyre & other rubber products), ceramics, paints & coatings, pharmaceuticals & cosmetics, electronics & batteries, agro-chemicals & fertilizers, speciality chemicals, lubricants, oil and gas and animal feed.
- Company caters to a diverse customer base across various end-use industries and have long-standing relationship with a few marquee customers in such industries.
- Diversification of customer base across the domestic and global markets, has enabled company to further diversify and expand the business relationships.
Growth in the Automotive industry due to Electric Vehicle Sales.
- The Tyre industry is the largest consumers of zinc oxide and in In India, tyre industry accounts for 70% of rubber consumption.
- The increased production in automotive industry supported by high disposable income and rise in demand for electric vehicles will drive the growth of rubber industry which will increase the usage of Zinc Oxide.
- Company’s customers in the rubber industry have contributed Rs.709.7 cr ie. 90.46% of revenue from operations for Fiscals 2023.
Company has tie-ups- in Procurement of Raw Materials.
- Company procure raw materials from multiple domestic and global suppliers. Company’s primary raw materials are virgin zinc metal and Zinc Dross (which is a type of zinc scrap).
- Company procures virgin zinc metal and Zinc Dross from various domestic and global entities. Zinc Dross is primarily produced by steel galvanizers as a by-product of steel production. The availability of zinc scrap is a challenge and the biggest constraint for new entrants in the market is to build a global supply network.
- Most of the Zinc Dross which comes from western countries is through old and established trading houses who work based on long term relationships and refrain from doing business with new entrants due to a wide range of complexities associated with dealing in Zinc Dross.
- Due to the difficult sourcing pattern of Zinc Dross, several zinc oxide facilities have faced supply side constraints due to which they have been forced to shut / curtail production and therefore, new players are often reluctant to enter the zinc oxide business.
- Company has successfully built a strong network of domestic suppliers as well as a diverse & global supplier base having procured raw materials from over 100 global suppliers in the last three years.
- Company’s extensive global supplier base enables us to evaluate the various available options and choose according to our commercial considerations.
- Some of these relationships have been nurtured over the years, enabling us to be termed as a preferred customer for certain global suppliers of Zinc Dross.
Long-term relationships with customers and suppliers.
- In the last three Fiscals, company catered to more than 250 customers, of which around 90% customers were repeat customers.
- Such long-term association with key customers also offers significant competitive advantages such as revenue visibility and industry goodwill.
- As a result of company’s deep rooted association with customers, Company often receives new product requirements from such customers which in turn, helps us to expand the product base.
Company plans to expand the production capacities and broadening the footprint of manufacturing operations.
- Company plans to establish a greenfield manufacturing facility in the state of Gujarat.
- Company believes that establishing a presence in the western part of India by setting up or acquiring a new manufacturing facility will, in addition to augmenting company’s manufacturing capacity, also enable company to capture market share by catering to the needs of the ceramics, pharmaceuticals and tyre industries, which have a presence in the western part of India.
Financials of the Company:
| (in Crores) | FY 21 | FY 22 | FY 23 | Upto 31st Dec 23 |
|---|---|---|---|---|
| Revenue | 440.4 | 623.0 | 794.1 | 491.0 |
| Net Profit | 28.7 | 43.1 | 56.7 | 18.5 |
Valuation of Peer Group Companies:
| Company Name | Face Value | EPS | PE Ratio | RoNW | NAV |
|---|---|---|---|---|---|
| J.G.Chemicals Limited | 10 | 17.32 | 12.75 | 27.49% | 63.02 |
| NOCIL Limited | 10 | 8.92 | 30.97 | 9.61% | 93.14 |
IPO Details:
| Details | Info |
|---|---|
| Issue Opens on | 5th March 2024 |
| Issue Closes on | 7th March 2024 |
| Issue Price | Rs.210 – 221 |
| Face Value | Rs.10 |
| Retail Category Allocation | 35% |
| Minimum Lot | 67 Shares |
| Minimum Investment | Rs.14,807 |
| Issue Constitutes | 29% |
| Issue Size | Rs.251 cr ($ 30 million) |
| Market Cap | Rs. 866 cr ($ 104 million) |
| Listing at | NSE & BSE |
| Equity Shares Offered (Fresh) | 74,66,063 (Rs.165 cr) |
| Equity Shares Offered (OFS) | 39,00,000 (Rs.86.19 cr) |
| Total Equity Shares Offered (Fresh + OFS) | 1,13,66,063 (Rs.251 cr) |
| Equity Shares Prior to the Issue | 3,17,20,000 |
| Equity Shares after the Issue | 3,91,86,063 |
Also Read : List of Upcoming IPO’s in India.
Also Read: List of Upcoming SME IPO’s in India.
Important Dates:
| Finalization of Basis of Allotment | on or Before 11th March 2024 |
| Initiation of Refunds | on or Before 12th March 2024 |
| Credit of Equity Shares: | on or Before 12th March 2024 |
| Listing Date: | on or Before 13th March 2024 |
IPO Valuation Parameters:
| Earnings Per Share (EPS) | Price To Earnings ratio (PE) | Return on Net Worth (RoNW) | Net Asset Value (NAV) |
|---|---|---|---|
| 17.32 | 12.75 | 27.49% | 63.02 |
| Company Contact Info: |
|---|
| J.G.Chemicals Limited Adventz Infinity @ 5, 15th Floor, Unit 1511, Plot 5, Block – BN, Sector – V, Salt Lake Electronics Complex, Bidhan Nagar CK Market, North 24 Parganas, Saltlake, West Bengal, 700 091, India. Telephone: +91 33 4014 0100 Email: corporate@jgchem.com Website: www.jgchem.com |
| Registrar to the Issue: |
|---|
| KFin Technologies Limited Selenium, Tower B, Plot No. 31 and 32 Financial District, Nanakramguda, Serilingampally Hyderabad, Rangareddi 500 032, Telangana, India Telephone: +91 40 6716 2222; E-mail: jgchemicals.ipo@kfintech.com Website: www.kfintech.com |
| Check IPO Allotment Status: |
|---|
KfinTech Website (Click on the below Link)http://kfintech/IPO/Allotment_Status |
