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Kolkata-based Shyam Steel Industries has filed draft red herring prospectus with SEBI seeking permission to launch its IPO. The company – a leading premium branded thermo mechanically treated (TMT) rebar manufacturer – plans to use IPO proceeds towards debt reduction.
Shyam Steel IPO: Fresh + OFS
Shyam Steel Industries IPO will consist of a fresh issue and an Offer For Sale (OFS) by existing shareholders. The company plans to raise INR200 crore (INR2 billion) by issuing fresh shares and these funds will be deployed in repayment and prepayment of certain borrowings of the company and its subsidiary Shyam Steel Manufacturing Limited (SSML).
The upcoming IPO will also include an OFS of up to 6,670,000 equity shares, comprising up to 1,160,300 equity shares by the promoter selling shareholders and up to 5,509,700 equity shares other selling shareholders.
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The public offer will be managed by Axis Capital Limited, Edelweiss Financial Services Limited, SBI Capital Markets Limited and IIFL Holdings Limited while Link Intime has been appointed the registrar to the issue.
Shyam Steel Industries: Strong financial performance
In the year ended 31 March 2018, the company earned a profit of INR108 crore on revenues of INR2,162.9 crore. During the latest nine months of FY2020, it has already earned INR131.6 crore and has booked INR2,014.1 crore in revenues.
Shyam Steel Industries IPO: Business background
Shyam Steel is primarily involved in production of TMT Rebar with backward integration in sponge and billet and sale of premium TMT bars (long steel products) in India. As on 31 March 2019, the company’s aggregate installed production capacity stood at 1,584,656 MTPA (metric tonne per annum) for steel manufacturing and at 641,960 MTPA for TMT Rebar.
The company operates all its steel manufacturing plants in West Bengal and has a strong dealer distribution network. The retail segment contributed 57.7% of its revenues in the nine months ended 31 December 2018. In the institutional segment, it supplies to projects of large government entities including public sector undertakings, National Highway Authority of India (NHAI), railways, military engineer services, Nuclear Power Corporation of India (NPCI) and various state governments.