Vraj Iron and Steel Files IPO Papers: Sponge Iron Maker Prepares to Tap Market

3 Jan 2024 , 10:32 AM

Chhattisgarh-based Vraj Iron and Steel has taken a significant step towards raising funds through an initial public offering (IPO) by filing preliminary papers with the capital markets regulator SEBI.

The public issue is exclusively comprised of a fresh issuance of shares amounting to Rs 171 crore, with no offer-for-sale (OFS) component included. Ahead of filing the red herring prospectus with the Registrar of Companies, the company, in collaboration with the merchant banker, is contemplating a pre-IPO placement to raise Rs 34 crore.

The funds raised, particularly the net fresh issue proceeds amounting to Rs 129.5 crore, will primarily be allocated for repaying debts incurred for the expansion project at the Bilaspur plant. Additionally, capital expenditure related to the expansion project at the Bilaspur plant will be financed. Any remaining proceeds from the offering will be utilized for general corporate purposes and issue-related expenses.

Vraj Iron and Steel, promoted by Gopal Sponge and Power, V A Transport, and Vijay Anand Jhanwar, operates two manufacturing plants in Raipur and Bilaspur, Chhattisgarh. The company specializes in the production of sponge iron, M S billets, and TMT bars under its brand Vraj, boasting a total installed manufacturing capacity of 2,31,600 tons per annum (TPA) for intermediate and final products. The Raipur manufacturing plant also houses a captive power plant with a current capacity of 5 MW as of March 2023.

In its draft papers, Vraj Iron and Steel stated that it is in the process of expanding capacities at its existing manufacturing plants and captive power plant. This expansion aims to increase the aggregate installed capacity, including intermediate and final products, from 2,31,600 TPA to 5,00,100 TPA. Simultaneously, the captive power plant’s capacity is set to rise from 5 MW to 20 MW. The proposed expansions are expected to become operational in the financial year 2024-25.

In the financial year ending March 2023, the company posted a substantial net profit of Rs 54 crore, a notable increase from Rs 28.7 crore in the preceding year. Similarly, revenue from operations witnessed significant growth, reaching Rs 515.7 crore compared to Rs 414 crore during the same period.

Aryaman Financial Services has been appointed as the merchant banker overseeing the IPO.