Mumbai: Paradeep Phosphates Ltd has filed a draft red herring prospectus with Securities Exchange Board of India to raise funds via an initial public offering. The firm is a joint venture of Zuari Agro Chemicals and OCP Group SA.

The IPO consists of a fresh issue of Rs1,255 crore and an offer for sale (OFS) of up to 120.04 million shares by its existing shareholders and promoters.

The OFS comprises of upto 7.55 million shares by Zuari Maroc Phosphates Pvt Ltd (ZMPPL) and upto 112.49 million shares or entire shareholdings by the government of India. Currently ZMPPL holds 80.45% and the government of India holds 19.55% stake in the company.

Axis Capital, ICICI Securities, JM Financial and SBI Capital Markets are the lead managers to the issue.

The proceeds from the issue worth Rs642 crore will be used for partly financing Zuari Agro Chemicals (ZACL) Goa facility. In March 2021, aiming to increase Paradeep Phosphates size, with a product portfolio comprising both phosphatic and nitrogenous fertilizers and accessing markets, products and brands offered by ZACL, the firm entered into a business transfer agreement with ZACL. The enterprise value is agreed at Rs2,052.30 crore.

The total annual capacity of fertilizers at the Goa facility was 1.2 million MT, comprising 0.8 million MT of di-ammonium phosphate (DAP) and nitrogen, phosphorus, and potassium (NPK) and 0.4 million MT of urea. 

In addition, the Goa facility also manufactures 0.23 million MT per annum of ammonia, which is largely consumed in urea manufacture. The Goa facility also has a captive power plant, a railway siding, and infrastructure to store raw material and finished goods and a bagging plant.

The company will also use Rs300 crore from the proceeds for repayment of debt. Aggregate outstanding borrowings of its firm stood at Rs1,419.19 crore in June'21.

The firm is mainly engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as DAP, three grades of NPK, Zypmite, Phosphogypsum and Hydroflorosilicic Acid (HFSA). It is also engaged in the trading, distribution and sales of Muriate of Potash (MOP), Ammonia, Speciality Plant Nutrients (SPN) and City compost. Its fertilizers are marketed under some of the key brand names in the market ‘Jai Kisaan – Navratna’ and ‘Navratna’.

The firm has a manufacturing facility in Paradeep, Odisha and includes a DAP and NPK production facility, a sulphuric acid production plant and a phosphoric acid production plant.

Its total annual granulation capacity of DAP and NPK production plant was approximately 1.40 million MT; total annual installed capacity of sulphuric acid production plant was approximately 1.30 million MT; and total annual installed capacity of phosphoric acid production plant was 0.30 million MT. The plant has three operational concentrators to concentrate weak phosphoric acid.

The firm also has facilities to store raw material, it can store 120,000 MT phosphate rock, 65,000 MT phosphoric acid solution, 50,000 MT sulphur, 45,000 MT sulphuric acid, 40,000 MT of liquid ammonia and 35,000 MT of MOP. It also has two captive power plants of 16 MW each, designed to run on the excess steam generated by the sulphuric acid production plant.

As of March 2021, its total income stood at Rs5,183.94 crore against Rs4,227.78 crore a year ago. Net profit for the period stood at Rs223.27 crore versus Rs193.22 crore last year.