Balaji Phosphates Ltd IPO

Status: Closed

Overview

IPO date

28 Feb 2025 to 04 Mar 2025

Face value

₹ 10 per share

Price

₹ 66 to ₹70 per share

Issue Size

7,158,000 shares
(aggregating up to ₹ 50.11 Cr)

Allotment Date

05 Mar 2025

Listing at

NSE

Issue type

Book Building - SME

Sector

Fertilizers

Objectives of Balaji Phosphates Ltd IPO

Initial public offer of upto 71,58,000 equity shares of face value of Rs. 10/- each ("Equity Shares") of Balaji Phosphates Limited ("the Company" or the "Issuer") for cash at a price of Rs. 70/- per equity share (the "Offer Price"), (including a premium of Rs. 60/- per equity share), aggregating upto Rs. 50.11 crores ("the Offer"), comprising of fresh offer of up to 59,40,000 equity shares aggregating up to Rs. 41.58 crores (the "Fresh Issue") ("the Issue") and an offer for sale of up to 12,18,000 equity shares by Aalok Gupta and Mohit Airen ("Selling Shareholder") aggregating to Rs. 8.53 crores ("Offer for Sale"), the offer includes a reservation of 3,58,000 equity shares of face value of Rs. 10/- each, at an offer price of Rs. 70/- per equity share for cash, aggregating to Rs. 2.51 crores ("the Market Maker Reservation Portion"). The offer less market maker reservation portion i.e. offer of 68,00,000 equity shares of face value of Rs. 10/- each for cash at a price of Rs. 70/- per equity share, aggregating to Rs. 47.60 crores is here in after referred to as the "Net Offer". The offer and the net offer will constitute 30.10 % and 28.60 % respectively of the post offer paid up equity share capital of the company.

Objectives of Balaji Phosphates Ltd IPO

Balaji Phosphates Ltd IPO Strategy

About Balaji Phosphates Ltd

Balaji Phosphates Limited was originally incorporated as Balaji Phosphates Private Limited on April 4, 1996, through a Certificate of Incorporation issued by the Registrar of Companies, Kanpur, under the provisions of the Companies Act, 1956. Pawan Kumar Agrawal and Sushil Kumar Agrawal were the initial subscribers to the company. In 2014, control of the company was transferred to its current promoters, Mr. Mohit Airen and Mr. Alok Gupta. Following a Special Resolution passed at an Extraordinary General Meeting (EGM) on September 7, 2023, the company was converted from a private limited company to a public limited company. Concurrently, the company's name was changed to 'Balaji Phosphates Limited.' Upon this conversion, a new Certificate of Incorporation was issued by the Registrar of Companies, Gwalior, dated September 18, 2023. The Company was originally promoted by Pawan Kumar Agrawal and Sushil Kumar Agrawal. In 2014, control of the company was transferred to the current promoters, Mr. Mohit Airen and Mr. Alok Gupta. The Company is engaged in production of NPK Granulated and Mixed Fertilizers, as well as Zinc Sulphate (21%). The manufacturing plant is located at Dewas in Madhya Pradesh. The Company focus on manufacturing Phosphate Fertilizers, offering a diverse range of products including Single Super Phosphate (SSP) in both powder and granulated forms. These SSP products are produced in accordance with the Fertilizer Control Order of India Standards. This plant has an installed capacity of 120,000 MTPA for Single Super Phosphate, 3,300 MTPA for Zinc Sulphate and 49,500 MT per annum of NPK Granulated & Mix. The Company sell products under the brands known RATNAM' and BPPL' to a diverse customers, including retailers, wholesalers and state-owned cooperatives with farmers being the end users of the products. The phosphate fertilizers comprising Single Super Phosphate (SSP), Zinc Sulphate and NPK Granulated & Mix Fertilizers are used in agricultural soils to enhance plant growth and development. SSP addresses phosphorus deficiencies, especially in acidic soils, promoting robust root development and seedling establishment. Zinc Sulphate corrects zinc deficiencies in alkaline and sandy soils, enhancing plant health and crop yield. NPK Fertilizers provide a balanced blend of nitrogen, phosphorus, and potassium for optimal crop growth and improved productivity. In line with the initiatives of the Department of Fertilizers, Government of India, the Company provide value-added, fortified SSP with zinc and boron to tackle soil deficiencies. These products cater to farmers in Madhya Pradesh, Chhattisgarh, Maharashtra, Telangana, and Andhra Pradesh, supporting local agricultural growth. One of the key raw materials is Rock Phosphate, which is categorized into two types, Crushed Rock Phosphate (CRP) and Beneficiated Rock Phosphate (BRP). For CRP, it rely on imports from various countries including Jordan, Morocco, Egypt and Other Gulf Countries, which have abundant and good-quality supply. BRP on other hand is sourced locally. Additionally, the Company source Sulphuric Acid, a key ingredient in manufacturing process, locally from Madhya Pradesh. The Company is planning an Initial Offer size aggregating upto 71,60,000 Equity Shares of Rs 10 each consisting a Fresh Issue upto 59,40,800 Equity Shares through Fresh Issue and 12,19,200 Equity Shares through Offer for Sale.

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Balaji Phosphates Ltd Financials (Restated Consolidated)

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Strengths vs Risks of Balaji Phosphates Ltd

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Strengths

Cost Effective sourcing and Strategic Location of Manufacturing Unit.
Cordial relations with customers.
Sustainable business model.
Leveraging the expertise of its Promoters and Management Team.
Quality assurance.

Risks

The company business is dependent on the performance of the agricultural sector in which its fertilizers are used. Any developments affecting the performance of the agricultural sector are likely to affect its business, results of operations and financial condition.
Reliance on imported raw materials poses risks that could adversely affect its production capabilities and overall profitability.
The company business is subject to climatic conditions and is cyclical in nature. Seasonal variations and unfavourable local and global weather patterns may have an adverse effect on its business, results of operations and financial condition.
The fertilizer industry in India is a regulated industry. Any change in Government policies towards the agriculture sector or a reduction in subsidies and incentives provided to farmers could adversely affect its business and results of operations.
The business is highly seasonal and such seasonality may affect its operating results and cash flow of the Company.
If the company is unable to obtain or maintain regulatory approvals for its products, the company may be unable to sell such products, which could adversely affect its business and results of operations.
Its Promoters have provided personal guarantees and securities to secure certain of the company loan facilities, which if revoked or invoked may requires alternative guarantees, repayment of amounts due or termination of the facilities.
A shortage or non-availability of electricity, water, fuel or an increase in fuel prices may adversely affect its production operations and have an adverse effect on the company business, results of operations and financial conditions.
The company has certain contingent liabilities that have not been provided for in the Company's financials, which if realised, could affect its financial condition.
The Company has experienced negative cash flows. Any negative cash flow in future could affect its results of operations.
The Company requires significant amounts of working capital for continued growth. The company inability to meet its working capital requirements may have an adverse effect on the results of operations.
The company is subject to risks arising from foreign exchange rate movements.
The company has incurred indebtedness which exposes it to various risks which may have an adverse effect on the company business and the results of operations.
The company has certain outstanding litigation, an adverse outcome of which may affect its business, reputation and results of operations.
The company inability to introduce new fertilizers and respond to changing customer preferences in a timely and effective manner, may have an adverse effect on its business, results of operations and financial condition.
The fertilizers and related products industry is intensely competitive and its inability to compete effectively may adversely affect the company's business, results of operations and financial condition.
Changes in technology may render its current technologies obsolete or requires the company to incur substantial capital expenditure.
The company is susceptible to product liability claims that may not be covered by insurance, which may requires substantial expenditure and may adversely affect its reputation and if successful, could requires the company to pay substantial sums.
The company is substantially reliant on its Promoters, Managing Director & KMPs for mentoring and growth of the company Businesses. Its inability to continue to receive such support from any of such persons in power and supervision could materially affect the company's operations. Further, its ability to attract, train and retain executives and other qualified employees is critical to its business, results of operations and future growth.
The company has been unable to locate certain of its historical corporate records.
The Company has not entered into any long-term contracts with its distributors/customers and the company typically operates on the basis of orders received on hand. Inability to maintain regular order flow would adversely impact its revenues and profitability.
Major portion of its revenue is derived from a limited number of customers. Any failures to retain one or more of the company customers or any disruption of sale of its product will have an adverse effect on the company financial performance and results of operations.
The Company faces competition from fertilizer players. Its failures to effectively compete may reduce the company profitability and results of operations.
The improper handling, processing or storage of its products or materials (both present or future), or spoilage of and damage to such products or materials, or any real or perceived contamination in its products or materials, could subject it to regulatory action, damage the company reputation and have an adverse effect on its business, results of operations and financial condition.
Its inability to maintain the stability of the company distribution network and attract additional high-quality dealers may have an adverse effect on its result of operations and financial conditions.
Its inability to meet the quality norms prescribed by the Government may be detrimental to the company business.
In addition to normal remuneration, other benefits and reimbursement of expenses, some of its Directors (including the company Promoter) are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.
The company has entered into related party transactions and may continue to do so in the future.
The company insurance coverage does not adequately protect it against losses (including damages or loss caused to the Products), and successful claims against the company that exceed its insurance coverage could harm its results of operations and diminish the company financial position.
The company is exposed to the risk of delays or non-payment by its customers and other counterparties, which may also result in cash flow mismatches.
The company ability to pay dividends in the future will depends upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.
Its business operations are majorly concentrated in certain geographical regions and any adverse developments affecting its operations in these regions could have a significant impact on the company revenue and results of operations.
Adverse publicity regarding its products could negatively impact the company.
There is no monitoring agency appointed by the Company to monitor the utilization of the Issue proceeds.
Its Promoters and the Promoter Group will jointly continue to retain majority shareholding in the Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.
Its may requires further equity issuance, which will lead to dilution of equity and may affect the market price of the company Equity Shares or additional funds through incurring debt to satisfy its capital needs, which the company may not be able to procure.
The Issue price of its Equity Shares may not be indicative of the market price of the company Equity Shares after the Issue and the market price of the company Equity Shares may decline below the issue price and you may not be able to sell your Equity Shares at or above the Issue Price.
Any failures to protect or enforce the company rights to own or use its trademark in "Balaji Phosphates Private Limited" could have an adverse effect on the company business and competitive position.
The company has applied for registration of logo "Balaji Phosphates Private Limited" and does not own the trademark legally as on date. The company may be unable to register the trademark in future.
Its lenders have imposed certain restrictive conditions on it under the company financing agreements. This may limit its ability to pursue the company business and limit its flexibility in planning for, or reacting to, changes in the company business or industry.
Industry information included in this Red Herring Prospectus has been derived from publicly available information. There can be no assurance that such third-party statistical, financial, and other industry information is complete, reliable or accurate.
The company has not been able to obtain certain records of the educational qualifications of a Director.
Pending Legal Proceedings Under the Essential Commodities Act and Fertilizer Control Order.
Past SEBI Inquiries against Promoters could affect the Company's reputation, financial stability and future Prospects.
Delays in filing its Annual Returns and Audited Annual Financial Statements.
Impact of on ongoing Litigations on the Company.
Construction of the Proposed Warehouse on Subsidiary's Land.
Legal Proceedings and Potential Recurrences.
The Company has not made any firm arrangements for the implementation of the capital expenditure proposed.
Its funding requirements and proposed deployment of the Net Proceeds are not appraised by any independent agency and are based on management estimates and may be subject to change based on various factors, some of which are beyond its control.
Any variation in the utilization of the Net Proceeds as disclosed in this RHP shall be subject to certain compliance requirements, including prior approval of the shareholders of the Company.
The Company will not receive any proceeds from the Offer for Sale portion of the Issue.