JG Chemicals Receive SEBI’s Approval for IPO

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JG Chemicals Ltd, a Kolkata-based zinc oxide manufacturer, has received the final approval from the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO).

The company filed the draft papers in January 2023, and the IPO will consist of a new issue of Rs 202.50 crore and an offer-for-sale of up to 57 lakh shares by its existing shareholders and promoters.

The company’s shareholders and promoters who will sell their shares through the offer-for-sale include Vision Projects and Finvest Pvt Ltd (36.4 lakh shares), Jayanti Commercial Ltd (1.4 lakh shares), Suresh Kumar Jhunjhunwala (HUF)(12.7 lakh shares), and Anirudh Jhunjhunwala (HUF)(6.5 lakh shares).

JG Chemicals will allocate the funds generated from the new issuance towards several objectives. These include investing in its material arm BDJ Oxides, paying off a debt of Rs 45 crore, establishing a research and development centre with Rs 5.31 crore, providing long-term working capital to its subsidiary with Rs 65 crore, and covering its own long-term working capital requirement with Rs 35 crore.

The company’s three manufacturing facilities located in West Bengal and Andhra Pradesh have a combined installed capacity of 77,040 MTPA as of October 31, 2022. In FY22, JG Chemicals generated a revenue of Rs 612.83 crore, up Rs 177.53 crore from the previous year, and a net profit of Rs 43.13 crore from Rs 28.80 crore the last year.

With a focus on the tire industry, JG Chemicals is India’s largest zinc oxide manufacturer. BDJ Oxides, the company’s material subsidiary, is the country’s only zinc oxide production facility to hold an IATF certification. JG Chemicals has a diverse customer base of over 200 domestic and 50 global clients across 10 countries.

JG Chemicals is exploring a private placement with merchant bankers, potentially raising up to Rs 40 crore, or a secondary sale of up to 2.85 million shares by selling shareholders, or a combination of both options. Successful placement completion would reduce the size of the new issue.

The book-running lead managers for the issue are Centrum Capital, Emkay Global Financial Services, and Keynote Financial Services, with KFin Technologies serving as the registrar. The company plans to list its equity shares on the BSE and NSE.

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