Agro Chemical Co, Dharmaj Crop Guard gets SEBI nod for Rs 300 crore IPO

Agrochemicals company, Dharmaj Crop Guard Limited, engaged in the business of manufacturing, distributing, and marketing of a wide range of agro chemical formulations such as insecticides, fungicides, herbicides, plant growth regulator, micro fertilizers and antibiotic to the B2C and B2B customers on Monday received the Securities and Exchange Board of India's (Sebi) approval to raise Rs 300 crore through an initial public offering (IPO). The company had filed its draft prospectus in January 2022.

The issue with a face value of Rs 10 per equity share consists of a fresh issue of equity shares worth up to Rs 216 crore and an offer-for-sale (OFS) of up to 1,483,000 equity shares by existing shareholders. The offer also includes a reservation for subscription by eligible employees.

Out of the proceeds from the fresh issuance, an amount of Rs. 104.97 crores will be utilised for funding capital expenditure towards setting up of a manufacturing facility at Saykha Bharuch, Gujarat, Rs 45 crore for funding incremental working capital requirements, Rs 10 crore for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company besides general corporate purposes.

Dharmaj Crop Guard is engaged in marketing and distribution of agrochemical products i.e Insecticides, Fungicides, Herbicides, Plant Growth Regulators. Micro Fertilizers and Antibiotic under brands in-licensed, owned and through generic brands, to Indian farmers through its distribution network in addition to its institutional sales. Besides, it also provides crop protection solutions to the farmers to assist them to maximize productivity and profitability.

Led by its Chairman and Managing Director, Rameshbhai Ravajibhai Talavia who has over 28 years of experience in the agrochemical industry. The company also exports its products to more than 20 countries across Latin America, East African Countries, Middle East and Far East Asia.

Its key customers include Atul Limited, Heranba Industries Limited, Innovative Agritech Private Limited, Meghmani Industries Limited, Bharat Rasayan Limited, Oasis Limited, United Insecticides Private Limited and Sadik Agrochemicals Co. Ltd.

It has obtained 398 registrations for agrochemicals from the Central Insecticide Board and Registration Committee (CIB&RC), out of which 201 agrochemical formulations and 6 agrochemical technical are for sale in India as well as for exports and 191 agrochemical formulations are exclusively for exports. Additionally, it has also applied for registrations of 6 agrochemical formulations and 17 agrochemical technicals with the CIB&RC, pending at various stages, according to the company's DRHP.

As of November 30, 2021, it had over 109 branded formulations being sold to farmers and selling 196 bulk products to more than 600 institutional customers domestically and in the international markets. It has over 150 trademark registrations including its branded products sold to its customers.

DCGLs revenue from operations grew 52.56% to Rs. 302.41 crore for the fiscal 2021 against Rs. 198.22 crore for the fiscal 2020, primarily due to increase in sales of its branded products, institutional sales and addition of more dealers and customers, while its net profits grew 94.85% from Rs. 10.76 crore in FY20 to Rs. 20.96 crore in FY21.

Elara Capital (India) Private Limited and Monarch Networth Capital Limited are the book running lead managers to the issue.