Balaji Speciality Chemicals has filed its Draft Red Herring Prospectus (DRHP) with the markets regulator, Securities, and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).
The public issue consists of a fresh issue of equity shares worth up to Rs 250 crore and an offer-for-sale (OFS) of up to 26,000,000 equity shares by the Promoter and selling shareholders. The utilization of funds raised via fresh issue would be used to repay 68 CRS of its certain outstanding borrowings and use Rs 119.5 CRS to fund its working capital requirements besides general corporate purposes. The company may consider a pre-IPO placement aggregating to 50 cr.
Incorporated in 2010, Balaji Speciality Chemicals Limited (BSCL) subsidiary of Balaji Amines Ltd, is the sole manufacturer in India of niche chemicals such as Ethylene Diamine (EDA), Piperazine Anhydrous (PIP), Diethylenetriamine (DETA), Aminoethyl ethanolamine (AEEA) and Aminoethyl Piperazine (AEP), using the Monoethanol Amine (MEA) process. The chemicals manufactured by BSCL are an import substitute and are used in various end-use industries such as specialty chemicals, agrochemicals, and pharmaceuticals. Its experienced and professional team is led by Rajeshwar Reddy Nomura.
EDA is ethylene amine with the lowest molecular weight. It contains two primary amine groups and is a colorless liquid with an ammonia-like odor. It is commonly used as a building block for the production of other chemical products.
Currently, ethylenediamine and piperazine (Anhydrous) production account for 85.17% of its revenues. Both are expected to grow at a CAGR of 8.3% and 8.6%, respectively, in the Indian markets. In Fiscal 2022, India imported 31.8 KT of Ethylenediamine, 1.1 KT of Piperazine, 4.4 KT of Diethylenetriamine, 0.2 KT of Amino Ethyl Ethanol Amines, and 0.3 KT of Amino Ethyl Piperazine.
Its key customers include Nanjing Union Chemical Company Limited, Korea India Limited, UPL Limited, Dr. Reddy’s Laboratories Limited, and Aarti Drugs Limited. From FY20 to FY22, its customer base grew from 45 to 182 customers. Balaji Specialty plans to introduce new products, such as Ethylenediamine tetraacetic acid (“EDTA”) and other derivatives of EDTA with varied applications across industries, besides continuing to develop catalysts to improve process and cost efficiencies in its operations.
The Chemical Company started producing commercially in June 2019 from its manufacturing plant in Solapur, Maharashtra. It has since scaled up operations, built its brand, and increased its clientele to become one of India’s fastest-growing specialty chemicals companies.
It has consistently increased its production volume from 4,428.39 MT in Fiscal 2020 to 16,851.72 MT in Fiscal 2022, enabling it to cater to the growing market opportunity. It had a total installed production capacity of 30,000 MTPA as of March 31, 2022.
BSCLs revenue from operations increased by 194.89% from Rs 174.40 crore in Fiscal 2021 to Rs 514.28 crore in Fiscal 2022, primarily due to the increase in the sale of Ethylenediamine. It clocked a profit of Rs 108.95 crore in the financial year FY22 against Rs 10.40 crore from the previous year. On account of stringent environmental norms in China, India’s specialty chemical industry is expected to post a 10% to 12% CAGR between 2021 and 2026 due to the rising demand from end-user industries.
HDFC Bank Limited and JM Financial Limited are the books running lead managers, and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.