Advanced Enzyme Technologies Ltd has joined the growing list of firms in the queue to float their initial public offer (IPO) even as the sliding secondary market has turned many others jittery (click here).
The company is looking to raise money through a fresh issue of shares besides an offer for sale by its promoters, financial investor Kotak Private Equity, among other shareholders.
It adds to the list of seven other firms who are waiting for SEBI's approval to go public.
Here's a snapshot of the IPO:
Issue: Fresh issue of shares to raise Rs 60 crore ($8.8 million); offer for sale of 3.1 million shares by promoters; 0.5 million shares by Kotak Private Equity and 0.85 million shares by other shareholders.
Bankers: ICICI Securities, Axis Capital.
Use of proceeds
Of Rs 60 crore that it plans to raise through the fresh issue, the firm would use bulk of it (Rs 50 crore) for repaying debt availed by its American arm from its own promoters. The wholly owned firm Advanced Enzymes USA had borrowed $20 million from a group firm and promoter, Vasant Laxminarayan Rathi, against promissory notes dated December 13, 2012 carrying an interest rate of 3.5 per cent per annum. The money was used for repaying certain other promissory notes issued to pay for purchase of shares of Cal-India.
Company
Advanced Enzyme claims to be the largest in its space and is engaged in the research and development, manufacturing and marketing of more than 400 proprietary products developed from 60 indigenous enzymes. It has more than two decades of fermentation experience in the production of enzymes and says it ranks among the top 15 global companies in terms of enzyme sales, and has the second-highest market share domestically, next only to the world leader Novozymes.
It operates in two primary business verticals namely Healthcare & Nutrition (human and animal) and Bio-Processing (food and non-food) and the former generates bulk of its revenues. It offers these products to global clientele of more than 700 customers spanning presence across 50 countries worldwide. It supplies products to diverse end-user industries like human healthcare and nutrition, animal nutrition, food processing, baking, dairy and cheese processing, fruit and vegetable processing, cereal extraction, brewing, grain processing, protein processing, oil and fat processing, biomass processing, textile processing, leather processing, paper & pulp processing, bio-fuels, bio-catalysis, etc. Its major focus is on developing enzymes through microbial fermentation.
Promoted by Chandrakant Laxminarayan Rathi and Vasant Laxminarayan Rathi, it has more than 55 employees including scientists, microbiologists, engineers, food technologists, biotechnologists, etc. It has four R&D facilities, of which two are located at Thane, and one each at Sinnar (Nashik, Maharashtra, India) and Chino, California. It also has six manufacturing facilities of which four are located in India - two integrated fermentation, recovery & formulation facilities at Sinnar and Pithampur (Dhar, Madhya Pradesh, India), one extraction and recovery facility at Satpur (Nashik, Maharashtra, India), and one blending, mixing and formulation facility at Vashind (Thane, Maharashtra, India). Two blending, mixing and formulation facilities are located outside at Chino (California, the US).
Its top 10 customers accounted for less than 40 per cent of total revenues on consolidated basis for the six months period ended September 30, 2015. Its customers include Sanofi India, Cipla, Ipca Laboratories, Alkem Laboratories, and Emcure Pharmaceuticals. US contributes a major portion of its international revenues.
Financials
The company doubled its revenues between FY11 to FY13 to Rs 240 crore and net profit almost tripled in the same period to Rs 49.1 crore. However, the firm has faced growth pangs since then. It grew 8.6 per cent the following year even as its profit more than halved. In the year ended March 31, 2015, its revenues actually slid to Rs 223.1 crore but it posted a record profit of Rs 50 crore last fiscal. In the first six months of the current year, it posted sales of Rs 138.8 crore with a net profit of Rs 35.1 crore. This shows on an annualised basis it is back to the growth track.
Investors
Kotak Private Equity had invested Rs 30 crore in the firm in mid 2012. It is now offloading around half of it.