Paranjape Schemes files prospectus for INR600 crore IPO

Paranjape SchemesPune-based realtor Paranjape Schemes Construction Ltd has filed draft red herring prospectus (DRHP) with market regulator SEBI for its IPO. The company aims to raise INR600 crore through the issue, while the number of shares to be offered will be decided at a later stage. The IPO will be managed by Axis Capital Limited and IDFC Securities Limited.

Read Also: Paranjape Schemes guns for INR4,000 crore valuation through IPO
Issue structure

The issue will include sale of fresh shares as there are no outside investors in the company. According to the prospectus filed with SEBI, promoter group owned all of 94,733,335 shares in the company, except 14 shares.  The promoter group is led by Paranjape Griha Nirman Private Limited which owns 88.67% shares while 51% subsidiary Linker Shelter Private Limited owns another 10%. Individuals such as Shashank Paranjape, Varsha Paranjape, Pushpa Paranjape, and Shrikant Paranjape hold the remaining shares.

Use of funds

Since there will be no offer for sale, entire proceeds of the issue will go to Paranjape Schemes. The company plans to use the funds for repayment and prepayment of loans, construction and development of ongoing projects, investment in MDPL subsidiary and general corporate purposes. Out of the total INR600 crore, the company plans to use INR185 crore towards debt reduction while INR186.3 crore will be invested in existing projects. INR160 crore is proposed to be invested in MDPL which also plans to use the funds for debt reduction.

Financial performance

The realty sector has been struggling over the last few years as a result of project delays and poor demand from end users. However, Paranjape Schemes’ unique positioning in the market and better execution has saved the company from issues that plague several players in this space. While Paranjape Schemes did feel the heat in the year ended March 2015 with a massive 35.3% decline in top line, it managed to remain profitable. While Paranjape Schemes’ financial performance has not been consistent in the last five years, it still looks much better than some of its bigger competitors.

Paranjape Schemes’ consolidated financial performance (figures in INR crore)
 FY 2011FY 2012FY 2013FY 2014FY 2015
Total revenue361.7268286.6581.2375.7
Total expenses265.7258.9299.3520.6343.4
Profit/(loss) after tax451.7(8.3)26.714.4

Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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