Fine Organic to Launch Rs. 600-crore IPO

Speciality chemicals firm, Fine Organic Industries Ltd, recently announced that it will launch its Rs. 600-crore initial public offering (IPO) on 20 June. The company has set a price band of Rs. 780-783 per share for the IPO, which will close on 22 June. The IPO – a pure offer for sale – will see the company’s promoters sell 7.66 million shares (or around 25% total stake).

The company, held entirely by the promoters’ family, had filed draft papers with markets regulator SEBI to float the IPO in February.

Fine Organic was founded in 1970 by Mr. Ramesh Shah, a Mumbai-based businessman with experience in chemical trading and Mr. Prakash Kamat, a technocrat from Institute of Chemical Technology. The company is one of the largest manufacturers of oleochemical-based additives in India. It produces a wide range of these speciality additives used in the food, plastic, cosmetics, paint, ink, coatings and other speciality applications in various industries. The company currently has three production facilities near Mumbai at Ambernath, Dombivli and Badlapur, with a total installed capacity of about 64,300 tonnes per annum (tpa).

Fine Organic

“The company has drawn up capital expenditure of Rs. 270-crore to expand capacities over the next 2 years and has already invested Rs. 70-crore towards equity portion,” Fine Organic’s CFO and Director Mr. Tushar Shah told reporters at an IPO roadshow in Mumbai.

The company is expanding its Ambernath facility by adding a capacity of 32,000-tpa at a cost of Rs. 130-crore, and it plans to fund 30 per cent from equity and 70 per cent from debt, he said.

As per the offer document, the company is boosting its R&D activities in Navi Mumbai by expanding applications labs for food and plastics, in addition to a new cosmetic application lab. The company has leased a plot of land in Dombivli for building a new R&D facility. The chemistry laboratory at its current Navi Mumbai facility will be moved to this new R&D facility.

It is also looking at investing Rs. 55-crore in setting up Fine Zeelandia facility for food ingredients in Mumbai in association with Dutch family-owned Zeelandia International, a part of the Royal Zeelandia group.

Meanwhile, as part of the global expansion plans, it is also setting up a joint venture firm named FineAdd with German partner Adcotec, to own and operate a 10,000-tpa facility in in Leipzig, Germany, which will be operational by Q3 FY20, according to the offer document. Fine Organic will own 50 per cent and Adcotec will own the other 50 per cent, it added. FineAdd will manufacture speciality food emulsifiers and other food additives.

The company is also establishing a wholly-owned subsidiary in China and in the process of opening a sales office in Shanghai. As of 31 December, Fine Organic had a range of 387 different products sold under the ‘Fine Organics’ brand, according to the company’s IPO prospectus. Its customers include large FMCG companies such as Hindustan Unilever and Parle Products.