Yarn manufacturer Sanathan Textiles has filed preliminary papers with capital markets regulator Securities and Exchange Board of India (SEBI) to raise ₹800 crore through an initial public offering (IPO).
The public issue is a combination of a fresh issue of equity shares aggregating up to ₹500 crore and an offer for sale (OFS) of up to ₹300 crore by promoters and the promoter group entities, according to the draft red herring prospectus (DRHP).
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The company may consider a pre-IPO placement of equity shares aggregating up to ₹100 crore. If such placement is undertaken then the size of the fresh issue will be reduced. Dam Capital Advisors Ltd and ICICI Securities Ltd are the book-running lead managers to the issue. The equity shares are proposed to be listed on BSE and NSE.
According to the draft papers, proceeds from the fresh issue of shares worth ₹210 crore will be used for investment in the company’s subsidiary — Sanathan Polycot Private — for funding its long-term working capital requirements, and ₹175 crore for repayment of debt and besides general corporate purposes.
Among the key risks related to the issue, the DRHP mentions that this being the first public issue of the equity shares of the firm and there has been no formal market for the shares. The floor price, cap price and the offer price as determined by the company, in consultation with the BRLMs, on the basis of the assessment of market demand for the shares by way of the book building process, should not be taken to be indicative of the market price of shares.
No assurance can be given regarding an active or sustained trading in the equity shares or regarding the price at which the shares will be traded after listing, according to the DRHP.
Sanathan Textiles operates three distinct yarn business divisions – polyester yarns, cotton yarns, and yarns – for technical textiles and industrial applications. These divisions are currently managed under a single corporate entity.
The company’s consolidated revenue from operations during the fiscal year 2023 was at ₹3,329.21 crore and profit after tax stood at ₹152.74 crore. Earlier in January 2022, the company filed draft documents with the markets regulator to mobilise funds through an IPO. It had received the market regulator’s approval in May 2022 to float the public issue but did not float it.
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Published: 19 Apr 2024, 08:39 PM IST