Laxmi Organics files document with Sebi to launch Rs 800 crore IPO

Taking cues from recent success and fundraising by specialty chemical companies, Laxmi Organics has filed the draft red herring prospectus (DRHP) with the capital market regulator Sebi to raise Rs 800 crore through an initial public offering (IPO). In the recent past, specialty chemical companies such as Rossari Biotech and Chemcon Specialty Chemicals had decent success at Dalal Street. They achieved a successful IPO with their issues being subscribed almost 80 and 149 times, respectively.

Laxmi Organics IPO consists of fresh issuance of Rs 500 crore and an offer-for-sale worth Rs 300 crore by the promoter Yellow Stone Trust, as per the initial paper filed with Securities and Exchange Board of India (Sebi).

The company intends to use fund proceeds for setting up a manufacturing facility for fluoro specialty chemicals, working capital requirements, purchase of plant and machinery and upgrading existing units. Adding to it, funds would be used for prepayment or repayment of all or a portion of outstanding loans, besides general corporate purposes. 

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A flagship company of the Goenka Group, the firm is a leading manufacturer of acetyl intermediates and specialty intermediates and solvents catering to diverse end-market sectors like pharmaceuticals, agrochemicals, food packaging, pigments and coatings. Established in 1989, the Mumbai-based company has global presence with customers in over 30 countries including China, the Netherlands, Russia, Singapore, United Arab Emirates, the UK and the US.

Axis Capital and DAM Capital Advisors have been appointed as the book running lead managers to the issue.

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For the financial year 2019-20, the company reported net profit of Rs 78.61 crore as against Rs 77.78 crore in the year ago period. The total income stood at Rs 1,366.27 crore versus Rs 1,434.98 crore in the corresponding period of the last year.