Paradeep Phosphates Limited as a company was started in 1981. The company was started as a joint venture between the Republic of Nauru and the Government of India. At the time of its inception, the company’s operation was to produce DAP. In 1993, their major Promoter, the Republic of Nauru, sold off their stake to the GoI. The company became a PSU. In February 2002, The Government of India sold their 74% stake to Zuari Maroc Phosphates Private Limited. Later on, the promoter company was demerged as Zuari Agro Chemicals. Check out Paradeep Phosphates IPO Details i.e. Allotment Status, Price, Listing Date, And Subscription Status etc.
Currently, ZMPPL has a holding of 80.45% stake in the company, while the rest is of the Government of India. The company is currently an integrated player in the market of DAP/NPK fertilizers. The company is engaged in the sales, production, trading and distribution of these fertilizers. The company sell their fertilizers under the brands’ Navratna’ and ‘Jai Kisaan -Navratna’. Along with their core business, the company also has a plant to manufacture sulphuric acid and phosphoric acid at Paradeep, Odisha.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the company, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE IPO OFFER:
- The company is currently well-positioned in terms of the valuations and business opportunity to take advantage of Anti-dumping duty and other policies been brought forward by GoI in the fertilizer sector.
- The company is India’s second-largest manufacturer and distributor of Phosphatic fertilizers.
- The company has a focus on the Backward integration of its manufacturing plants. It is also focusing on smart sourcing for raw material utilization.
- The company has a large Unused landbank which they have an aim to set up manufacturing capacity. The process of the company is a safe and accredited procedure.
- The company has a strategic benefit for the production facility, material storage handling and port services.
- The company has well-known brands under its item portfolio. The company also has a wide distribution and logistics network.
- The company is backed by strong promoters, experienced management and well-known stockholders.
PARADEEP PHOSPHATES IPO DETAILS:
Paradeep Phosphates Limited has its headquartered in Bhubaneswar, Odisha. The company submitted its DRHP to SEBI. Currently, the company is waiting for the approval of SEBI to float its IPO in the market. The IPO comprises of issue of fresh equity of Rs.1255 crores. As per the DRHP, the company will also carry out an OFS of 120,035,800 equity shares.
The OFS will be brought forward by the Promoter and existing stakeholders of the company. Through the OFS, ZMPPL- Zuari Maroc Phosphates Pvt Ltd will offload their 75,46,800 shares. The rest of 11,24,89,000 equity shares will be offloaded by the President of India as the Government of India holds it.
The funds have been collected from the IPO will be used in various divisions:
- partly financing of the fertilizer manufacturing facility been acquired in Goa
- for payment of debt
- general corporate purposes.
|IPO Opening Date|
|IPO Closing Date|
|Issue Type||Book Building Type|
|Face Value||Rs.10 / Equity share|
|Min Order Quantity|
|Listing At||BSE, NSE|
|Fresh Issue||Rs.1255 Crore|
|Offer for Sale||120,035,800 equity shares|
|Basis of Allotment Date|
|Initiation of Refunds|
|Credit of Shares to Demat Account|
|IPO Listing Date|
|Basis of the Allotment Type||% Of IPO Offer|
|Qualified Institutional Buyer||50|
STRENGTH AND GROWTH ASPECTS OF PARADEEP PHOSPHATES IPO :
- The company has established its reputation as the largest producer of complex fertilizers and DAP in India. The company has a capacity of 1.3MMTPA.
- The company has unique and flexible production units that allow them to switch to DAP or NPK’s as required demand and supply.
- The growth of the Chemical and Agro- Chemical Sector industry in the Country will boost the margins and performance of the company at both top-line and bottom-line parameters.
- The company has planned to increase its production unit facility to 1.7 MMTPA by FY2023.
- The company has a strong networking and monopoly business of DAP in India.
- The company has a wide retail network of 4530 dealers and 60,000 retailers.
- The company will also benefit from the favourable outlook of the domestic demand for phosphate-rich fertilizers. It is due to the deficiency in soil and better yield results obtained by the fertilizers.
- Boost from the GoI by providing the Anti-Dumping duty for the phosphates fertilizers that used to be imported from China.
- The company also benefits in terms of raw materials. The company is in backward integration to produce the phosphoric acid, which is used for manufacturing their core Agro- Chemical. The company doesn’t import this raw material. The company itself has set up a production facility to cater to the domestic players’ need for phosphoric acid.
- The company has also commissioned in production of sulphuric acid. It set up a 1.32 MMTPA sulphuric acid plant in FY2016. The plant improved the cost structure of the company.
- The company’s focus is to increase the production of phosphoric and sulphuric acid by the installation of a new production facility. It will help in contribution margins.
- The company has a strong synergy with overseas companies.
- The company has its separate networking operations and has a dedicated jetty at the Paradeep Port for the imported raw materials.
- The company received many awards in past, such as:
- Best Brand Platinum Award 2021 in the Corporate Excellence category.
- 19th Greentech Safety Award 2020 for outstanding achievement in the category of industry sector safety excellence
- ICONSWM Excellence Award 2019 which was given at the 9th International Conference on Sustainable Waste Management towards Circular Economy
- The company’s integrated business strategy has enabled them to increase profitability. It has also helped the company to improve capital efficiency while maintaining a competitive edge in the market.
- The company has a long-term supply agreement for the major raw materials which they import.
- The company regularly include meetings with farmers. The company in the past has carried out promotions at point-of-sale sites, field demonstrations and various rural upliftment initiatives. The company has also carried out meetings with the dealers and retailers. It has helped them to strengthen their brand and come up with new innovative solutions.
WEAKNESS AND THREATS OF PARADEEP PHOSPHATES IPO:
- The company recently planned to complete the acquisition of the Goa plant. Due to the absence of a strong and adequate equity contribution, the company lacks funds to acquire the plant.
- As per the company estimates, their return metrics will weaken after the acquisition of the goa unit. It is a major concern for the company.
- The company’s entire product portfolio is centred around phosphatic and complex fertilizers. The competitors of the company have a much-diversified product portfolio. Due to this, the company is more vulnerable to volatility in terms of margins and financial parameters.
- The company also faces a problem of the vulnerability of profitability to agro-climatic conditions in the Country.
- The company is engaged in business in a highly regulated sector. The sector is also subject to strict guidelines, rules and regulations by GoI.
- The company also faced a challenge due to the sharp rise in prices of phosphorus fertilizers. A high price differential also hit the company with urea, leading to a fall in demand for the product.
- The company has already proposed that its working capital requirements will remain high in recent years. The factor responsible is the delays in subsidy from the GoI.
- The company also registered high receivable days. It led to an increase in their working capital intensity. It also impacted their margins and the high interest costs, which will impact the company’s profitability.
- The large working capital requirement also impacts the liquidity position of the company.
- The company need to significant leverage their balance sheet to acquire ZACL’s assets. It is against the expectations of their equity funded acquisition which can significantly register an underperformance of the acquired assets.
- Paradeep Phosphates is fully reliant on some other raw materials. The company imports these raw materials. It includes rock phosphate, ammonia, sulphur and potash.
- The company is engaged in a cyclical climate business. As a result, they see less PAT in the non-cyclical period.
- The company will impact if it doesn’t foresee the supply and demand correctly. It can also be heavily impacted by the vulnerability in the supply of raw materials and failure in the networking and distribution system.
- The Promoter, directors and the company itself is currently under trial for a legal procedure.
FINANCIAL TRENDS OF PARADEEP PHOSPHATES IPO:
- The company have a reputable financial record. It has delivered robust results highlighting its strong financial performance in the past quarters.
- Over the YoY basis, the company has reported an increased upfront in both Top-line and Bottom-line parameters. The company has reported an increase in the CGR, Income, PAT and total assets past 3 years.
- Their EBITDA of the company in the FY21 was Rs. 5,612.56 million. The EBITDA has also consistently increased over the YoY basis.
- The PBT, also known as profit before tax of the company in the FY21, was at Rs. 3,665.03 million. The PBT also reported an increase from the last financial years. It determines the strong demand and upfront strong business operations of the company.
|Particulars||For the year/period ended (in Cr.)|
|Profit After Tax||223.27||193.22||158.96|
|PARAMETER||MARCH 21||MARCH 20||YoY %|
|Core EBITDA Margin (%)||10.50||10.96||-4.25|
|EBIT Margin (%)||9.26||10.07||-8.06|
|Pre-Tax Margin (%)||7.10||5.49||29.21|
|PAT Margin (%)||4.33||4.63||-6.51|
|Cash Profit Margin (%)||5.94||6.36||-6.55|
|Net Sales Growth (%)||23.18||-3.79||712.02|
|Core EBITDA Growth (%)||13.50||2.87||369.81|
|EBIT Growth (%)||13.25||2.81||371.87|
|PAT Growth (%)||15.16||22.07||-31.32|
|EPS Growth (%)||15.55||21.55||-27.84|
PROMOTERS OF PARADEEP PHOSPHATES IPO:
The promoters of the company are:
- Zuari Maroc Phosphates Private Limited
- Zuari Agro Chemicals Limited
- OCP S.A.
- The President of India- GoI
Paradeep Phosphates was founded as a Joint Venture in 1981. It is a J.V. of ZMPPL- Zuari Maroc Phosphates Private Limited and Government of India. The ZMPPL itself is a Joint Venture of ZACL- Zuari Agro Chemicals Limited and OCP Group S.A.
|Pre-Issue Share Holding||100 %|
|Post Issue Share Holding|
Paradeep Phosphates Limited
5th Floor, Orissa State Handloom Weavers’ Co-Operative Building,
Pandit J.N Marg, Bhubaneswar 751 001, Odisha, India
Tel: +91 080 45855561
Link Intime India Private Limited
C 101, 1st Floor, 247 Park
L.B.S. Marg, Vikhroli (West)
Mumbai – 400 083
Telephone: +91 22 4918 6200
LEAD MANAGER(S) OF PARADEEP PHOSPHATES IPO :
- Axis Capital Limited
- J.M. Financial Limited
- ICICI Securities Limited
- SBI Capital Markets Limited