JG Chemicals IPO: All You Need To Know
JG Chemicals is the largest zinc oxide manufacturer in terms of production and revenue, with a 30% market share.
JG Chemicals Ltd. will launch its three-day initial public offering on Tuesday to raise up to Rs 251.2 crore.
The IPO is a combination of a fresh issue of Rs 165 crore and an offer for sale of Rs 86.19 crore, with the price band fixed in the range of Rs 210 to Rs 221 per share. The bidding for anchor investors will open for a day on March 4.
As part of the OFS, Vision Projects & Finvest Pvt., Suresh Kumar Jhunjhunwala (HUF), Anirudh Jhunjhunwala and Jayanti Commercial Ltd. will offload equity shares.
Centrum Capital Ltd., Emkay Global Financial Services Ltd., and Keynote Financial Services Ltd. are the book-running lead managers for the issue. The company's shares will be listed on the National Stock Exchange and the BSE.
Issue Details
Issue opens: March 5.
Issue closes: March 7.
Issue price: Rs 210–221 per share.
Fresh issue: Rs 165 crore.
Offer for sale: Rs 86.2 crore.
Total issue size: Rs 251.2 crore.
Market value at upper end of price band: Rs 1,005.1 crore.
Listing: BSE and NSE.
Use Of Proceeds
This is how the net proceeds from the issue will be utilised:
Proceeds worth Rs 910 crore will be used in BDJ Oxides, a subsidiary of the company. The funds will be used for repayment, funding capital-expenditure requirements for setting up of a research & development centre, and funding the long-term working-capital requirements of the subsidiary.
A total of Rs 35 crore from the issue will be used for funding the long-term working capital of the company.
Business
JG Chemicals is the largest zinc oxide manufacturer in terms of production and revenue, with a 30% market share. The company sells over 80 grades of zinc oxide and is among the top ten manufacturers of zinc oxides globally.
The company's product caters to a wide spectrum of industrial applications, including in rubber, ceramics, paints and coatings, pharmaceuticals and cosmetics, electronics and batteries, agro chemicals and fertilizers, and specialty chemicals.
Over the last three years, the company has sold products to over 200 domestic customers and over 50 global customers in more than 10 countries.
As on Dec. 31, 2023, the company's aggregate installed capacity is of 77,040 MTPA and is spread across three manufacturing facilities at Jangalpur and Belur in West Bengal, and Naidupeta, Andhra Pradesh. The Naidupeta plant is the company's largest manufacturing facility and is owned and operated by the company's material subsidiary.
Key Risks
The company gets a significant portion of its revenue from select customers. If one or more such customers choose not to source their requirements from the company, the financial condition and results of operations may be adversely affected.
They do not have long-term agreements with their customers and rely on purchase orders for delivery of our products. Loss of one or more customers could adversely affect our business, results of operations and financial condition.
They do not have long-term agreements with suppliers of raw materials.
The company is heavily dependent on machinery for our manufacturing operations. Any unscheduled, unplanned or prolonged disruption or breakdown of our machinery could adversely affect our business, financial results and growth prospects.
The company's name and logo are not registered as trademarks. If they are unable to protect their intellectual property rights, their financial condition and results of operations may be adversely affected.
There are pending litigations against the company, their subsidiaries and a few of their directors.
