Mumbai-based firm S.H. Kelkar & Co. Pvt Ltd, a manufacturer of fragrances and flavours, has filed its draft red herring prospectus (DRHP) with securities market regulator SEBI to float its initial public offer (IPO). The proposed public issue comprises fresh issue to raise Rs 200 crore besides an offer for sale which would lead to part-exit for its private equity investor Blackstone.
This would make it the fourth PE-backed firm to file documents for an IPO this year. Several others filed their prospectuses late last year.
For the world's largest alternative assets manager Blackstone, this would mark the first liquidity event through an IPO. Two years ago it had explored a similar part-exit through a proposed public issue of Emcure Pharmaceuticals Ltd but later opted for a secondary deal where Bain Capital bought it out.
Moreover, Blackstone would clock second such exit/part-exit from its Indian portfolio this year. In January it struck a deal to sell auto parts maker Agile Electric Sub Assembly Pvt Ltd to Japan's Igarashi Electric Works Ltd and Indian investment bank MAPE Advisory Group for $106.4 million (Rs 655 crore).
It doubled its investment value within just one-and-a-half years after it acquired the firm and backed the management buyout of its public-listed subsidiary Igarashi Motors.
The galloping share prices in the secondary market have triggered a rush of companies filing documents to go public. Majority of these firms are PE-backed and in several of them, the investor is looking to exit or part-exit in the public issue.
Here's a snapshot of the IPO
* IPO comprises fresh issue of shares to raise up to Rs 200 crore ($32 million) in addition to an offer for sale of 13.2 million equity shares by Blackstone and up to 2.37 million equity shares by promoter family member Prabha Ramesh Vaze.
* Bankers: JM Financial and Kotak Mahindra Capital.
Use of proceeds
* Of the proceeds of the fresh issue worth Rs 200 crore, the firm would use Rs 150 crore for repaying debt including that of its wholly owned subsidiary KV Arochem Pvt Ltd.
Company
* Incorporated in 1955, the firm is a manufacturer of fragrances and flavours finding applications in varied sectors such as fast-moving consumer goods (FMCG), pharmaceuticals and dairy products.
* S.H. Kelkar & Co is promoted by Vaze family with Ramesh Vaze as chairman, B Ramkrishnan (chief executive officer) and Kedar Vaze (director and chief operating officer).
* It has three manufacturing units in India (two fragrance units in Maharashtra and one bulk aroma chemicals unit in Vapi, Gujarat), and one in the Netherlands, with a total installed manufacturing capacity of over 19,819 tonnes annually.
* S.H. Kelkar has sales offices across India, and has recently opened offices in Singapore, Indonesia and Thailand for growing sales across Southeast Asia.
* In 2010, it had acquired Netherlands-based PFW Aroma Chemicals.
* It is among the top five players in India in the fragrance and flavour business and the top domestic manufacturer among its peers. Other firms include Givaudan, IFF, Firmenich and Symrise—all multi-national firms.
* It has over 3,200 customers for fragrance and fragrance ingredients products, including Godrej Consumer Products Limited, Marico Limited, Wipro Consumer Care and Lighting Limited, Hindustan Unilever Limited, VINI Cosmetics Private Limited and J.K. Helen Curtis Limited. Over 90 per cent of its total revenues come from this unit.
* Its flavour products are used as a raw material by producers of baked goods, dairy products, beverages and pharmaceuticals. It has over 300 customers for flavour products, including Britannia India, VICCO Laboratories and Vadilal Industries Limited.
Financials
* For the financial year ended March 31, 2014, the company posted net revenue of Rs 761.3 crore, EBITDA of Rs 145 crore and a net profit of Rs 79.26 crore. For the six months period ended September 30, 2014, it registered a net revenue of Rs 404.8 crore, EBITDA of Rs 87.6 crore and a net profit of Rs 42.97 crore.
Investor
* Private equity major Blackstone Group had invested Rs 243 crore (then $44 million) in the company in 2012, a part of it through a secondary transaction. It currently holds 33.15 per cent stake in the company. S.H.Kelkar had previously raised funding from Wayzata Investment Partners back in 2010 but Wayzata later exited the firm.
(Edited by Joby Puthuparampil Johnson)