Godavari Biorefineries IPO Review & Details

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Godavari Biorefineries Limited is the country’s biggest and largest integrated bio-refinery. The company is engaged in the business of manufacturing ethanol. It is the pioneer in the field of ethanol-based chemical production. The company is also engaged in producing sugar, various grades of alcohol, rectified spirits and bio-based chemicals. Godavari Biorefineries Limited has also signed a pact for power regeneration with the Karnataka government.

The company is a part of the Somaiya group. The group is an old market player in the sugar industry with an experience of 80 years and also in the bio-based chemicals industry with experience of another 60 years. Godavari Biorefineries also has a production facility in Sameerwadi. The capacity of the plant is 380 KLPD. The revenue profile of the company is divided into various categories. The whole business profile of the company is classified under:

Chemical business35.15% of revenue
Sugar business32.31% of revenue
Sugar contributing ethanol and its by-product29.89% of revenue
PowerRemaining revenue

OBJECTS OF THE IPO ISSUE:

  • Prepayment of all the company’s loans, which be availed on a consolidated basis. 
  • To meet corporate targets. 
  • To fund the working capital requirement.  

BASIS OF THE OFFER:

  • Godavari Biorefineries is one of the major ethanol producers and subproducts of ethanol. The company is also the pioneer of the manufacturing of ethanol.
  • The company has a fully integrated biorefinery system with a long-term association with sugarcane growers.
  • Godavari Biorefineries has a well-diversified product portfolio. It has a diversified client base and caters its service to various sectors.
  • The company has an in-house R&D team equipped with skilled professionals in the technical, management and operational segment.
  • The company has a team of Experienced promoter base, support from Somaiya group in the technical, management and operational sector for its business.

GODAVARI BIOREFINERIES IPO DETAILS:

Godavari Biorefineries Limited companies headquarter is in thane. The company submitted its DRHP to the SEBI and is currently waiting for approval from SEBI to float its IPO in the market. The company’s IPO is a mix of issues of fresh equity shares worth Rs. Three hundred seventy crores and an OFS been brought forward by the promoters and selling stakeholders of 6,558,278 equity shares. The company also stated that it would also carry out a Pre-IPO placement offer of Rs. One hundred crores are inclusive of the total IPO offer. Check Day by Day IPO Subscription Details (Live Status)

The selling stakeholders through the IPO are as follows:

Samir Shantilal Somaiya5 lakh equity shares
Somaiya Agencies5 lakh equity shares
Mandala Capital49.27 lakh equity shares
Filmedia Communication Systems3 lakh equity shares
Somaiya Properties and Investments1.31 lakh equity shares
Lakshmiwadi Mines and Minerals2 lakh equity shares

The company also stated that the proceeds from the issue of the fresh equity will be used as:

For repayment in full and part of their outstanding loansRs. 214 crores
Fund capital expenditure and expansion of their sugarcane crushing unitRs. 44.84 crores
Funding of the capital expenditureRs 10.6 crores
IPO Opening Date 
IPO Closing Date 
Issue TypeBook Building Type
Face ValueRs. 10 per Equity share
IPO Price 
Market Lot 
Min Order Quantity 
Listing AtBSE, NSE
Issue Size
Fresh IssueRs. 370 crores
Offer for Sale6,558,278 Equity shares
Basis of Allotment Date 
Initiation of Refunds 
The Credit of Shares to Demat Account 
IPO Listing Date 
Basis of Allotment Type% Of the allotment been allotted through the IPO
Qualified Institutional Buyer50
Non – Institutional Investor15
Retail35

WEAKNESS AND THREATS:

  • Godavari Biorefineries relies heavily on sugarcane availability to produce the sugar, cogeneration divisions, ethanol and distillery.
  • The company also challenges that its major revenue comes from small clients.
  • Godavari Biorefineries efficiency is majorly due to its innovative and excellent R&D team. Any underperformance from the firm will lead to a negative impact on the company’s business profile.
  • The COVID-19 has impacted the company in both operational and financial terms. As a result, their production volume didn’t match their set standards and predictions.
  • Godavari Biorefineries power business relies heavily on a power purchase agreement with the state of Karnataka.
  • The company is also vulnerable to the fluctuation in the forex, as a major percentage of their revenue is from export or in foreign currency. 
  • Godavari Biorefineries also holds some secured credit facilities. Any other existing liability will put certain kinds of restrictions on the company’s production and manufacturing facility and capacity.
  • The business of the sugar industry is highly cyclical. The company also faces a challenge of the availability, price, supply-demand of raw materials. Another factor determining the company’s financial performance is the monsoon season impact.
  • The company is engaged in a business where it must comply with many guidelines, industrial standards, regulatory risks. The whole industry is influenced by the government policies that factor up their cost, margins and other financial parameters.
  • The company involving its directors and promoters face a trial under certain legal procedures. Any negative news upfront will lead to a detrimental impact on their business.

STRENGTHS AND GROWTH ASPECTS:

  • Godavari Biorefineries has a very strong promoter base. It is part of the prestigious Somaiya group that has a long track record of success on operational and financial terms.
  • The company has a Fully Integrated sugar manufacturing and production unit. The company has a diversified revenue profile with a diversified product portfolio. 
  • The company also stated that it has focused on increasing its ethanol production. The ethanol business helps them to attain higher operating margins.
  • The company also has a solid financial profile as the PBILDT margins of the company increased to 10.30% from 7.24% last year. The company’s operating cycle also improved as it was registered to 46 days due to a reduction in the inventory days of the company.
  • The company also registered an increase in their interest coverage ratio and debt protection matrix. The company plans to carry out a CAPEX plan to set up a new facility and expand their current ethanol production facility. Their internal and cash accruals fund it.
  • Godavari Biorefineries has a vast and very highly reputed client base. The company’s top customers contribute around 24.39% of its total sales. The company also carries out business from exports in 20 different nations, though around 78% of their business is from India. Some of their major clients are:
Biocon LimitedSun Pharmaceutical Industries Limited
Dr. Reddy’s Laboratories LimitedUnited Spirits Limited
Hershey India Private LimitedVarun Beverage Limited
Hindustan Coca-Cola Beverages Private LimitedPrithvi Speciality Chemicals Limited
  • Godavari Biorefineries is the biggest producer of MPO in the world. It holds a monopoly business in producing the 1,3-butylene glycol and bio ethyl acetate. 
  • The company also stated that it will increase its ethanol production from 380 KLPD to 570 KLPD until FY25, which will boost the sugarcane valorisation of the company.
  • Godavari Biorefineries also holds a facility to crush 15,000 TPD and a CO-Gen plant generating capacity of 45.56 MWh. It also has a 400 KLPD production facility.
  • The company also has adequate liquidity, which is due to the positive cash flow and the net return on the company’s investment. 
  • The company is one of the highest beneficiaries of the PM Atmanirbhar Abhiyaan, Make In India Initiative and the PLI scheme present to boost their production and turn the company up to international standards.
  • Godavari Biorefineries has received many awards in the past. The BONSUCRO awarded the company FICCI’s Award for Efficiency in Water Usage-Chemicals, Water Resource and Management Award in Chemical Industry. The company is also a care certified company.
 
ParticularsFor the year/period ended ( in Cr.)
31-Mar-2131-Mar-2031-Mar-19
Total Assets1,441.701,434.491,641.75
Total Revenue1,546.381,472.801,566.33
Profit After Tax27.154.065.53
PARAMETERMARCH 21MARCH 20YoY %
   Earnings Per Share (Rs)6.470.97568.35
   CEPS(Rs)17.7111.6951.56
   Book NAV/Share (Rs)108.22101.846.27
   Tax Rate (%)41.38-23.46276.40
   Core EBITDA Margin (%)10.257.0844.71
   EBIT Margin (%)7.724.9456.33
   Pre – Tax Margin (%)3.010.231235.28
   PAT Margin (%)1.770.28534.01
   Cash Profit Margin (%)4.833.3643.78
   ROA (%)1.900.27611.62
   ROE (%)6.161.03496.22
   ROCE (%)11.706.6576.01
   Asset Turnover(x)1.080.9612.24
   Sales/Fixed Asset(x)1.641.65-0.46
   Working Capital/Sales(x)29.08-6.44551.26
   Fixed Capital/Sales(x)0.610.610.47
   Receivable days34.9833.683.88
   Inventory Days95.69119.09-19.65
   Payable days94.66121.33-21.99
   EV/Net Sales(x)0.360.40-10.64
   EV/Core EBITDA(x)3.335.01-33.55
   EV/EBIT(x)4.658.14-42.84
   EV/CE(x)0.380.41-7.30
   Net Sales Growth (%)5.42-6.00190.31
   Core EBITDA Growth (%)41.77-19.97309.17
   EBIT Growth (%)64.80-25.18357.35
   PAT Growth (%)568.35-26.572239.23
   EPS Growth (%)568.35-32.811832.09
   Total Debt/Equity(x)1.231.38-10.44
   Current Ratio(x)1.080.7446.14
   Quick Ratio(x)0.430.3042.96
   Interest Cover(x)1.641.0556.51

PROMOTERS:

  • Samir Shantilal Somaiya
  • Somaiya Agencies Private Limited
  • Somaiya group
Pre – Issue Share Holding36.66%
Post Issue Share Holding

CONTACT DETAILS:

Godavari Biorefineries Limited
Somaiya Bhavan, 45/47, M.G. Road,
Fort, Mumbai – 400 001, Maharashtra
Tel: +91 22 6170 2100
E-mail: investors@somaiya.com
Website: www.godavaribiorefineries.com

REGISTRAR:

Link Intime India Private Limited
C 101, 247 Park
L.B.S Marg, Vikhroli (West)
Mumbai – 400 083, Maharashtra
Telephone no.: +91 22 4918 6200
Email: godavari.ipo@linkintime.co.in
Website: www.linkintime.co.in

LEAD MANAGER(S):

  • JM Financial Limited
  • Equirus Capital Private Limited
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