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Balaji Speciality Chemicals files IPO papers with SEBI, plans to raise Rs 250 crore via fresh issue

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Balaji Amines subsidiary Balaji Speciality Chemicals has filed its Draft Red Herring Prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The public issue consists of a fresh issue of equity shares worth up to Rs 250 crore and an offer-for-sale (OFS) up to 2.6 crore equity shares by the Promoter and selling shareholders, according to the draft papers. The Solapur-based speciality chemicals company will use the funds raised via fresh issue to repay 68 crore of its certain outstanding borrowings and use Rs 119.5 crore to fund its working capital requirements besides general corporate purposes.

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Earlier in June, the board of directors of Balaji Speciality Chemicals gave approval for fund raising through an initial public offer of equity shares. HDFC Bank and JM Financial are the book running lead managers and Link Intime India Private Limited is the registrar to the issue. The equity shares are proposed to be listed on both BSE and NSE . The firm may consider a pre-IPO placement aggregating to Rs 50 crore. Incorporated in 2010, Balaji Speciality Chemicals Limited is a manufacturer of niche chemicals such as Ethylene Diamine (EDA), Piperazine Anhydrous (PIP), Diethylenetriamine (DETA), Aminoethyl ethanolamine (AEEA) and Aminoethyl Piperazine (AEP), using the Monoethanol Amine (MEA) process.

Financials

Company’s revenue from operations increased by 194.89% from Rs 174.40 crore in Fiscal 2021 to Rs 514.28 crore in Fiscal 2022 primarily due to the increase in sale of Ethylenediamine. It clocked a profit of Rs 108.95 crore in the financial year FY22 compared to Rs 10.40 crore from the previous year. On account of stringent environmental norms in China, India’s specialty chemical industry is expected to post a 10% to 12% CAGR between 2021 and 2026 due to the rising demand from end-user industries.

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The chemicals manufactured by the company are an import substitute and are used in various end-use industries such as speciality chemicals, agrochemicals, and pharmaceuticals. At present, ethylenediamine and piperazine (Anhydrous) production account for 85.17% of company’s revenues. Both are expected to grow at a CAGR of 8.3% and 8.6% respectively in the Indian markets. In FY22, India imported 31.8 KT of Ethylenediamine, 1.1 KT of Piperazine, 4.4 KT of Diethylenetriamine, 0.2 KT of Amino Ethyl Ethanol Amines and 0.3 KT of Amino Ethyl Piperazine. Balaji Speciality Chemicals’ customers include Nanjing Union Chemical Company, Korea India, UPL, Dr. Reddy’s Laboratories, and Aarti Drugs. From FY20 to FY22 its customer base grew from 45 to 182 customers.