Century Metal Recycling Ltd, a recycler of aluminium and zinc alloys, has filed its draft prospectus with the Securities and Exchange Board of India (SEBI) to float an initial public offering.
The public issue comprises a fresh issue of shares worth Rs 150 crore and a sale of 6.4 million shares by promoters and existing shareholders.
The total IPO size is estimated at Rs 650-700 crore (around $97-104 million), according to people in the know.
Century Metals does not have a listed peer with a comparable business portfolio. An IPO and market listing will make the New Delhi-based company first in its space to go public.
Century Metals is among the 23 companies that have filed their IPO proposals with SEBI, besides 15 other firms that have regulatory approval to float an IPO.
These companies are looking to benefit from the recent boom in stock markets and investor inflows into equity asset classes. These factors resulted in a record IPO fundraising activity in 2017 with more than three dozen firms going public on the main board last year and raising a total of over Rs 67,000 crore ($10.5 billion).
As many as 14 companies have already gone public this calendar year cumulatively raising about Rs 20,000 crore.
Here’s a snapshot of the proposed IPO by Century Metal Recycling:
Issue
The IPO size is estimated at Rs 650-700 crore. This comprises a fresh issue of shares worth Rs 150 crore and an offer for sale of 6.4 million shares by existing shareholders.
Gauri Shankar Agarwala, the company’s chairman and executive director, has offered to sell 7.93 lakh shares. Managing director Mohan Agarwal will sell 7.88 lakh shares.
Promoter group firms Sanjivani Non Ferrous Trading Pvt. Ltd and Grand Metal Recycling Pvt. Ltd will also sell shares as will Global Scrap Processors Ltd, an investor shareholder who had acquired shares from IFCI Venture Capital Fund.
Use of proceeds
The company will use Rs 125 crore of the net fresh proceeds towards repayment or advance payment of certain borrowings availed by it. It will also use an undisclosed amount towards general corporate purposes.
Bankers
ICICI Securities and Edelweiss Financial Services Ltd are managing the IPO.
Lawyers
Khaitan & Co is the legal counsel to the company. Cyril Amarchand Mangaldas is the legal adviser to the merchant bankers whereas Platinum Partners is representing the investor selling shareholder.
Company
Century Metals was incorporated in July 1994 and claims to be India’s largest producer of recycled aluminium. It was founded by Agarwala and is now managed by his son Mohan Agarwal.
The company is engaged in processing aluminium-based metal scrap to manufacture aluminium alloys and sell theose either in the form of liquefied (molten) alloy or in solid ingots.
It has seven manufacturing facilities and has annual installed capacity of 2.18 lakh tonnes, which accounts for approximately 16% of the aggregate estimated installed recycling capacity in India.
Century Metal caters to the automotive manufacturing sector in India, specifically in the passenger vehicle, two-wheeler and die-casting segments.
The company supplies its products to original equipment manufacturers such as Maruti Suzuki India Ltd, Honda Cars India Ltd, Honda Motorcycle and Scooter India Pvt. Ltd and India Yamaha Motor Pvt. Ltd.
It also supplies to auto-parts makers such as Rockman Industries Pvt Ltd, Rico Auto Industries Ltd, Minda Industries Ltd and Sunbeam Auto Pvt Ltd, which was recently acquired https://www.vccircle.com/exclusive-kedaara-capital-seals-buyout-in-auto-component-space/ by Kedaara Capital.
Besides recycling aluminium, the company gets its revenue from segregation and sale of metal scrap as a part of its manufacturing process.
Financials
Century Metal reported consolidated net profit of Rs 70.54 crore for the nine months ended December 2017 on consolidated revenue (from operations) of Rs 1,815.46 crore.
Its consolidated revenue for 2016-17 stood at Rs 2,416.35 crore and its net profit was Rs 71.11 crore. Its consolidated revenue for 2015-16 was Rs 2,340.50 crore and its net profit was Rs 30 lakh.