Paras Defence and Space Technologies has received capital markets regulator Sebi's go ahead to raise funds through an initial share sale.

The offering comprises fresh issuance of shares worth Rs 120 crore and an offer of sale of up to 17,24,490 equity stocks by promoters and existing shareholders, according to the draft red herring prospectus (DRHP).

The company is considering a pre-IPO placement of equity shares worth Rs 35 crore.

Paras Defence and Space Technologies, which filed preliminary papers with Sebi in March, obtained its observation on June 8, an update with Sebi showed on Monday.

Sebi's observation is very necessary for any company to launch public issues like initial public offer (IPO), follow on public offer (FPO) and rights issue.

Proceeds of the fresh issue would be used to fund capital expenditure requirements, to support incremental working capital needs and repayment or prepayment of loans availed by the company.

The company is engaged in designing, developing, manufacturing and testing a wide range of defence and space engineering products and solutions.

Paras Defence and Space Technologies' business is highly dependent on projects and programmes undertaken by the central government and associated entities, such as defence public sector undertakings and government organisations involved in space research.

The company's total income was Rs 149.05 crore for the fiscal year ended March 31, 2020, and Rs 37.94 crore for the six-month period ended September 30, 2020. Its profit after tax was at Rs 19.65 crore for the fiscal year ended March 31, 2020, and it incurred a loss of Rs 13.9 lakh for the six-month period ended September 30, 2020. Anand Rathi Advisors is the book running lead manager to the issue. The equity shares of the company would be listed on BSE and NSE.