SEBI has issued its observations regarding the IPO of KPR Agrochem Limited paving the way for the maiden public offer of the Andhra Pradesh-based company. Through the upcoming IPO, KPR Agrochem Limited plans to raise INR180 crore by issuing fresh shares while existing investors plan to sell 50 lakh shares. Promoters and promoter group own nearly 80.8% equity stake in the fertilizer and pesticides producer and the offer for sale (OFS) largely comprises of members of promoters and promoter group.
KPR Agrochem had filed its IPO application on 23 December 2015 through its merchant bank Karvy Investor Services Limited and the capital market regulator approved the IPO plan on 5 April 2016.
Use of IPO proceeds
The company plans to spend INR50 crore towards repayment/prepayment of borrowings while another INR50 crore will go towards working capital requirements. Setting up of a crop nutrient product manufacturing facility of NPK mixtures in Tamil Nadu will involve INR29 crore and INR9 crore will be used to modernize KPR Agrochem’s existing pesticides manufacturing facility at Biccavolu, East Godavari, Andhra Pradesh. In addition, the company plans to spend INR9.1 crore towards setting-up new Kisan Seva Kendras in Andhra Pradesh and Karnataka.
Promoted by Papa Reddy Kovvuri, Venkata Mukunda Reddy Karri, Rajasekhar Reddy Kovvuri and Cresco Technology LLP, KPR Agrochem is focused on manufacturing, distribution and retailing of a wide range of crop yield enhancing and protection products. Its product portfolio includes fertilizers, pesticides, NPK mixtures, and insecticides, as well as supplements for animal feeds. The company also produces sulphuric acid and sulphuric acid based chemicals.
As one can imagine, the demand for fertilizers and pesticides is seasonal and cyclical in India. Accordingly, the company has seen ups and downs in recent years financially and witnessed strongest revenue and profitability in FY2012. In the latest year ended March 2015, the company posted revenue of INR600 crore, marking a mild decline from previous year. Similarly, its profit of INR27.1 crore was down from previous year.