JG Chemicals has received final observations from the capital markets regulator Sebi to launch its initial public offering (IPO). The Kolkata-based Zinc Oxide manufacturer filed its draft red herring prospectus (DRHP) with Sebi in January 2023.
The IPO consists of a fresh issue of Rs 202.50 crore and an offer-for-sale (OFS) of up to 57 lakh equity shares by its existing shareholders and promoters. Vision Projects & Finvest and Jayanti Commercial will offload 36.4 lakh equity shares in the OFS, whereas will Suresh Kumar Jhunjhunwala (HUF) sell 12.7 lakh equity shares, and Anirudh Jhunjhunwala (HUF) will offer 6.5 lakh equity shares.
JG Chemicals, in consultation with merchant bankers, may consider a private placement aggregating up to Rs 40 crore or a secondary sale by selling shareholders of up to 28,50,000 equity shares or a combination thereof. If such placement is completed, the fresh issue size will be reduced.
The net proceeds from the fresh issue will be used for investment in its material arm BDJ Oxides. The company will utilize the funds towards repayment of the debt, setting up a research and development center, long-term working capital requirement and general corporate purposes.
Incorporated in the year 2001, JG Chemicals is India’s largest zinc oxide manufacturer in terms of production and revenue. Over the last three years, it marketed and sold its product to over 200 domestic customers and over 50 global customers in more than 10 countries and the tyre industry are the largest consumers of its product.
It supplies to 9 out of the top 10 global tyre manufacturers and to all of the top 11 tyre manufacturers in India, and also to leading paints manufacturers, footwear players and cosmetics players in India, according to a CARE Report.
Its 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.
For the fiscal year that ended on March 31, 2022, JG Chemicals reported a revenue of Rs 612.83 crore while its net profit for the period stood at Rs 43.13 crore. For the six months which ended September 30, 2022, revenue from operations stood at Rs 425.07 crore and net profit stood at Rs 35.71 crore.
Centrum Capital, Emkay Global Financial Services and Keynote Financial Services are the book-running lead managers to the issue, whereas KFin Technologies has been appointed as the registrar to the issue. The equity shares of the company are proposed to be listed on both BSE and NSE.
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