Gandhar Oil Refinery IPO: All You Need To Know

Gandhar Oil Refinery Ltd. will launch its initial public offering on Nov. 22.

The state-run company plans to raise Rs 500.69 crore via a fresh issue and an offer for sale.

The IPO will comprise a fresh issue worth Rs 302 crore. The company also has an offer for the sale of 1.18 crore shares, worth up to Rs 198.69 crore, by the promoter selling shareholder.

The price band is fixed between Rs 160 and Rs 169 per share. At the upper price band, the company is valued at Rs 1,654 crore in market capitalisation.

Out of the total IPO size, 50% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 35% is to be allotted to retail individual investors.

Issue Details

• Issue opens: Nov. 22.

• Issue closes: Nov. 24

• Total Offer Size: Rs 500.69 crore.

• Fresh issue size: Rs 302 crore.

• Offer for sale size: Rs 198.69 crore.

• Face value: Rs 2 apiece.

• Fixed price band: Rs 160–169 per share.

• Listing: NSE, BSE.

Shareholding Pattern

The pre-IPO shareholding stands at 8,00,00,000 and will increase to 9,78,69,823 after the initial public offering.

Ramesh Babulal Parekh, Kailash Parekh, and Gulab Parekh, who belong to the promoter category, will be selling 22.5 lakh shares each in the OFS, while Green Desert Real Estate Brokers, Denver Bldg Mat & Décor TR LLC, and Fleet Line Shipping Services LLC will exit the company by selling their entire shareholding in the company.

Business

Gandhar Oil Refinery is a producer of white oils by revenue, with a growing focus on the consumer and healthcare end-industries. As of June 30, their product suite comprised over 440 products, primarily across the personal care, healthcare and performance oils, lubricants, and process and insulating oils divisions under the “Divyol” brand.

The company's products are used as ingredients by Indian as well as global companies for the manufacture of end products for the consumer, healthcare, automotive, industrial, power, and tyre and rubber sectors.

The white oil market is one of the fastest-growing segments in the specialty oils sector, and Gandhar Oil Refinery is the largest manufacturer of white oils by revenue in FY23, including domestic and overseas sales, and is one of the top five players globally in terms of market share in CY22, according to a Crisil report.

As of June 30, the refinery's products were sold in over 100 countries across the globe and catered to over 3,500 customers in FY23, including companies such as Procter & Gamble, Unilever, Marico, Dabur, Patanjali Ayurved, Bajaj Consumer Care, and Emami, among others, which supported the company's global supplier base and manufacturing operations in India and the United Arab Emirates.

Use Of Proceeds

The offer includes a fresh issue and an offer for sale. The company will not receive any proceeds from the offer for sale part of the issue, and all proceeds from the OFS will be received by the promoter selling shareholder.

The company intends to utilise the net proceeds from the fresh issue for the following purposes:

• Investment in Texol via a loan to finance repayment or payment of a loan facility availed by Texol from the Bank of Baroda

• Funding working capital requirements

• General corporate purposes

• Capex through the purchase of equipment and civil work for capacity expansions at the following plants:

Silvassa Plant: Capacity expansion of automotive oil

Taloja Plant: Capacity expansion of petroleum jelly, cosmetic product division, as well as capacity expansion of white oils by installing blending tanks.

• Funding working capital requirements

• General corporate purposes

Risk Factors

• The company depends significantly on its personal care, health care and performance oil business division and any downturns in the industries addressed by the business divisions could affect the business, financial condition and results of operations.

• The company is subject to strict quality requirements, standards and inspections, and the success and acceptance of its products by its customers are largely dependent on its ability to meet such requirements and standards.

• Delays, interruptions or reductions in the supply of raw materials to manufacture the company's products and abrupt fluctuations in raw material prices may affect the business and its operation.