Fine Organic Industries IPO

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Fine Organic Industries IPO

Fine Organic Industries IPO
7.3

Company Background

7.5 /10

Price band

7.0 /10

Financial Health

8.0 /10

Industry Situation

7.5 /10

IPO Proceeds Usage

6.5 /10

Pros

  • Growing Financial Performance
  • Strong Management

Cons

  • IPO Proceeds not aligned

Fine Organic Industries Limited Background

IPO Basic Details
IPO Name Fine Organic Industries Limited
Opening Date 20th June
IPO Size 76,64,994
Face Value ₹5
IPO Price Band ₹780 - ₹783
Bid Lot 19
IPO Type Book Built Issue
Total Retail Allocation 35%
Exchanges NSE, BSE

 

Fine Organic Industries is coming up with an IPO in this month of June 2018.

Fine Organic Industries Limited is one of the largest manufacturers of oleochemical-based additives in India and a strong player globally. The oleochemical-based additives manufactured by the company are mostly derived from plants and they are used in food, paint, ink, plastic, cosmetic and other industries. Most of the products are exclusive and there are only a few players who act as competitors.

The company was founded in 1970 by Mr Ramesh Shah, a business with chemical trading experience and Mr Prakash Kamat, educated from Institution of  Chemical Trading. Both the visionaries saw the future of oleochemical-based products and decided to establish an organisation to benefit from the innovative technology.

With this vision and passion, the two entrepreneurs brought the company to where it stands today. Fine Organic Industries is highly innovative and customer-driven. It has about 603 direct customers and 127 distributors from 67 countries.

Fine Organic Industries has three production facilities in Maharashtra:

  • Ambernath
  • Badlapur
  • Dombivli

The products are also manufactured by a company named Olefine Organics, which is a partnership firm and it also has the manufacturing facility at Ambernath, Maharashtra. The company is also planning to set up a third manufacturing facility at Ambernath, Maharashtra, one in Leipzig, Germany, one in Patalganga, Maharashtra and another one at Ambernath, Maharashtra.

Fine Organics also has a joint-venture Fine Zeelandia, with Netherlands-based Zeelandia.

The key strengths of Fine Organics Industries are:

  • It is the largest producer of oleochemical-based additives in India.
  • The product portfolio is highly diversified and caters to a variety of high growth industries.
  • The business model is specialised and has a lot of entry barriers, keeping the competition restricted.
  • The manufacturing facilities are strategically located and have in-house development facilities.
  • It is an innovative company, with strong capabilities for R&D.
  • The customer base is diversified and strong.

Fine Organic Industries Management

The company has a strong management team, with decades of experience in the oleochemical-based additives sector. The Board has ten Directors, including five executive Directors and five Independent Directors.

Prakash Damodar Kamat- Chairman and Executive Director

He is one of the co-founders and promoters of the company and is the current Chairman. Mr Kamat joined the Fine Organic Group in 1970 and has been associated with the company since its inception. He holds a Master’s degree in science and technology from the Institute of Chemical Technology, Mumbai. He is also one of the Directors at Oleofine Organics Sdn. Bhd. And Smoothex Chemicals.

Mr Kamat has extensive work experience in product development, process technology and research and development and plays an important role in the products, processes and R&D at Fine Organic. He is also one of the selling shareholders in the present IPO, holding about 5.9 million shares of the company and offering about 1.5 million shares for sale.

Mukesh Maganlal Shah- Managing Director and Executive Director

Mr Shah is the Managing Director and one of the Executive Directors at Fine Organic. He joined Fine Organic in 1973 as a co-promoter and has also been associated with the company since its inception and specialises in establishing quality controls and sales and marketing.

The biggest contribution of Mr Shah has been his sales and marketing skills that helped the products of Fine Organic reach customers across the country and find new applications.

Mr Shah has a Bachelor’s degree in Science from the University of Bombay and has about four decades of experience in the oleochemical-based additives sector.

The strength and the commitment of the management plays a significant role in the growth and the future of the company. Fine Organic Industries has a management team, which is diversified and strong and has remained with the organisation since its inception.

All the core functionalities like manufacturing, finance, sales and marketing, human resources and logistics are well taken care of, with highly experienced and dedicated team members. It is the drive of the management that has led the company to innovation and helped it expand into various sectors across the world.

The strong management gives a strong base for the company to keep expanding and promises a bright future.

Fine Organic Industries IPO Data Points

Fine Organic Industries Limited filed the draft proposal for an initial public offering with the Securities and Exchange Board of India (SEBI) in the month of February 2018.

The proposal consists of a public issue of 7.66 million shares of the company owned by the promoters and the other selling shareholders in the secondary market. The company has a total of 30.66 million shares outstanding. Thus, the offer represents 25% of the equity share capital.

The ownership of shares by the promoters is as follows:

The offer is divided into the following portions:

As far as the Price band is concerned, Fine Organic Industries has kept that in the range of ₹780 to ₹783 with a face value of ₹5. With the limit of ₹2 Lakh for a retail investor in terms of IPO investments, you can bid for 19 shares in a lot.

Fine Organic Industries Financial Performance

Fine Organics reported total revenues of ₹789.2 crore, total assets of ₹448.5 crore, net profit of ₹122.6 crore and earnings per share of ₹25.92 Crore for the financial year ended March 31, 2017. The company has shown exceptional financial performance in the past few years and it is growing positively each year.

The net profit of Fine Organic Industries has increased by 30.63% in the five years from 2012 to 2017 and the revenues have increased by 9.63% in the same period. Because of the outstanding performance and the increasing numbers, the company is a safe and promising bet for investing in the IPO.

Fine Organic Industries IPO Objective

The proceeds of the offer will directly go to the selling shareholders and not to the company. Fine Organic Industries and the promoters intend to achieve the benefits of listing the equity shares on the stock exchanges.

The IPO will enhance the name and brand of the company, along with a public market to the shares. Due to the IPO, the existing shareholders will be able to receive liquidity.

Fine Organic Industries IPO Events

Fine Organic Industries Limited filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India on February 12, 2018.

The prospectus received approval from SEBI on May 11, 2018. The approval is for the listing of 76,64,994 equity shares of the company in the secondary market by the existing shareholders.

The IPO is going to open on 20th June along with the Rites Limited IPO and will be open for bidding till 22nd June. By the end of the month, the company will be listed on the respective exchanges as well.

Fine Organic Industries IPO Advisors Information

For the IPO of Fine Organic Industries Limited, the book running lead managers or the merchant bankers are JM Financial Limited and Edelweiss Financial Services Limited. The Registrar to the Offer is Karvy Computershare Private Limited. The statutory auditor for Fine Organic is B. Y. & Associates.

Luthra & Luthra is the Indian legal advisor and Duane Morris & Selvam LLP is the international legal advisor to the merchant bankers. Cyril Amarchand Mangaldas has been hired as the legal advisor to Fine Organic Industries Limited.

Fine Organic Industries Contact Information

In case you are looking for more information regarding the IPO or need more details about Fine Organic Industries, following are the contact details for your reference:

Fine Organic Industries Limited
Fine House, Anandji Street
Off M G Road, Ghatkopar East
Mumbai- 400007
India

Contact Number: +91-22-2102 5000, 2012 8899, 2012 6666
Email address: info@fineorganics.com

Fine Organic Industries IPO Recommendation

Considering the history and background information of Fine Organic Industries Limited, it has been an excellent performer in its field. The IPO recommendation is a must-buy.

The company has been around for a very long time and has shown consistent performance. It has been one of the best in the oleochemical-based additives industry and has always been innovative and R&D-focused to grow and develop.

The management of the team is very strong and reliable. Most of the Directors have been with the company since its inception and have contributed to the overall growth of the company. The company lays strong emphasis on research & development and has always come up with new and unique products to let it move into newer markets.

Fine Organic Industries has also performed well financially and has shown a consistent increase in the revenues and net profit. The company is also oriented towards expansion and has formed new facilities and joint ventures. It also plans to expand further in the future.

Although the company does not intend to use the proceeds of the IPO for the company’s purposes, yet for all the reasons mentioned, the IPO seems to be a good option to invest and be a part of the company’s bright and growing future.

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