Shyam Metalics & Energy gets SEBI nod for Rs1,107 crore IPO
Premium- The public offer comprises of a fresh issue of Rs657 crore and an offer for sale of Rs450 crore
Kolkata based Shyam Metalics and Energy Ltd (SMEL) on Monday received approval of capital markets regulator Securities and Exchange Board of India(Sebi) for its initial public offering.
The public offer comprises of a fresh issue of ₹657 crore and an offer for sale of ₹450 crore by selling shareholder Subham Capital, Subham Buildwell, Kalpataru Housefin & Trading, Dorite Tracon, Narantak Dealcomm and Toplight Mercantiles also a reservation of up to 3 lakh equity shares for eligible employees.
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In February, the company had filed its Draft Red Herring Prospectus (DRHP) with the markets regulator for an IPO.
The company intends to utilize the net proceeds from the fresh issue for repayment or prepayment of ₹470 crs of its debt and that of its subsidiary, Shyam SEL and Power Ltd; and for other general corporate purposes.
The portion reserved for Qualified Institutional Buyers(QIB) to be up to 50% of the offer, Non-Institutional Investors(NII) to up to 15% of the portion reserved while upto 35% will be reserved for the Retail Investors.
The Kolkata based long steel products and ferro alloy focused company has been EBITA positive since its operations in 2005 and sells intermediate and final products across the steel value chain catering to institutional and end use customers through 42 distributors, brokers across 13 states and 1 union territory.
The company currently operates three manufacturing plants that are located at Sambalpur in Odisha, and Jamuria and Mangalpur in West Bengal.
It also sells thermo mechanically treated bars and structural products and as on Dec 31, 2020 had an aggregate metal capacity of 5.71 million tonnes per annum to increase to 11.60 mn MTPA as per the capacity expansion plans by FY2025 and will be the fourth largest player in the sponge iron industry when compared with Indian peers on the basis of capacity.
SMEL is looking to enter in segments such as pig iron, ductile iron pipes and aluminum foil and is in the process of commissioning an aluminum foil rolling mill at Pakuria in West Bengal with a proposed installed capacity of 0.04 MTPA , expected to become operational by FY2022.
As Steel demand growth has outpaced the countries macroeconomic growth in FY18 and FY19. The impetus given to the infrastructure segment which accounts for approximately 30% of the steel demand will see an increase in FY22 besides additional factors such as the soft revival in the housing sector led by Affordable Housing and post covid recovery of the Auto Sector, as India today is the second largest producer of steel in the world with nearly 6% share of global steel production.
ICICI Securities Ltd., JM Financial Ltd, Axis Capital Ltd, IIFL Securities Ltd and SBI Capital Markets Ltd are the book-running lead managers to the issue.
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