- Anupam Rasayan India Limited is one of the leading company engaged in custom synthesis and manufacturing of specialty chemicals in India
- Operates two distinct business verticals –
- Life science-related specialty chemicals (~93-95% of revenues) comprising products related to agrochemicals, personal care and pharmaceuticals, and
- Other specialty chemicals containing pigment and dyes, and polymer additives
- The company has a diverse customer base – domestically and internationally. Exports products across Europe, Japan, the USA, Singapore and several other countries
- Strong long-term relationship with various multinational corporations like Syngenta Asia, Sumitomo Chemicals, UPL
- With two-thirds of revenue from exports, Anupam Rasayan is recognized as a three-star export house by the Government of India
- As of December 31, 2020, the company operated six multi-purpose manufacturing facilities in Gujarat, India
- ‘Make In India’ campaign will act as a stimulus to the emergence of India as a manufacturing hub for the chemicals industry
Founded in 1984, Anupam Rasayan commenced its business as a partnership firm in Surat, Gujarat. It began operations as a manufacturer of conventional products. Over the years, its product portfolio evolved into a custom synthesis and manufacture of life science-related specialty chemicals. The company’s key focus in custom synthesis and manufacturing operations is to develop an innovative in-house process and achieve cost optimization.
There exist significant barriers to entry in the custom synthesis and manufacturing industry. These include customer validation, high-quality standards, stringent specifications, process innovation, and cost rationalization expectations.
Anupam Rasayan IPO opens for subscription between March 12 to March 16, 2021. With strong prospects in the specialty chemicals industry and a robust financial profile, the company is a good long-term play.
Chemical industry backdrop in India
Based on the rise in demand from end-user industries, India’s specialty chemicals industry will grow at a CAGR of 10-11% over the next five years.
Custom synthesis manufacturing is also on the rise in India due to high end-user demand. The contract research and manufacturing services market may grow by 12% in the next five years.
There are a few key reasons for the expected strong growth. Firstly, tight global supply due to China’s stringent environmental norms. Secondly, India’s contribution of meagre 1-2% of global exportable specialty chemicals provides a widespread opportunity.
Thirdly, China’s weakened position can be beneficial for India, and many global manufacturers have initiated discussions with Indian firms. There are immense opportunities as international firms seek to diversify their operations and shift part of their existing supply chain from China.
Therefore, and finally, several global players prefer ‘China plus one offshore strategy’, with capacities turning to cost-efficient markets with strong technology capabilities, like India. Chinese companies will recover but at a significantly higher manufacturing cost due to investment in environment-friendly equipment and manufacturing practices.
About the Promoters
Well experienced promoters lead the company, some of whom have significant chemical industry experience. Mr Anand Desai and Ms Mona A Desai have two-three decades each of experience in the chemicals industry. Further, Chairman Dr Kiran C Patel is an experienced healthcare sector businessperson.
Financial Profile
Below is the condensed financial information of Anupam Rasayan India Limited.
Amount in Rs Cr excluding per share data
- Healthy revenue growth and strong margins
- Strong return on net worth
Comparison with listed peers
- As per the company, the relevant industry composite P/E ratio is 42.8x
Offer proceeds
Particulars | Amount |
Gross issue size | Rs 760 Cr |
Purpose of the offer and utilization of IPO proceeds:
- Repayment/prepayment of debt and accrued interest thereof amounting to approx. Rs 564 Cr
- General corporate expenses
- Enhance visibility and brand image amongst existing and potential customers
IPO Factsheet
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The information provided in the red herring prospectus filed by the company with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend that the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks. It should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.
The author is a senior finance professional with over fifteen years of work experience in corporate finance and has an affinity for personal finance and investment management. Please leave your comment or share thoughts on this article via email at decodefinance.in@gmail.com. For more articles, please visit the website www.decodefinance.in
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Nice 👌
Very good Insights..