5 Gujarat firms’ IPOs in the offing; to raise over Rs4,000 crore

The year 2010 could well be the year of public issues. As many as 17 IPOs have been listed on India’s two premier stock exchanges, the BSE and NSE, in less than three months, equalling the total number of IPOs registered in 2009.

In the fray are five Gujarat-based companies, C Mahendra Exports, Gujarat Pipavav Port, Chiripal Industries, Aster Silicates and the state-owned Gujarat State Petroleum Corporation Ltd (GSPC).

The five Gujarat companies are expected to hit the capital markets in about six months. Together, the five companies are expected to raise over Rs4,000 crore in a quarter or two. Of this, GSPC alone plans to raise around Rs3,500 crore by the next quarter.

Apart from the five, an Ahmedabad-based pharmaceutical company, Claris Lifesciences, is also expected to file its drafted red herring prospectus (DRHP) to the Security and Exchange Board of India (Sebi) soon. C Mahendra Exports, a Surat-based diamond company, is also likely to file its revised DRHP in a week; the issue may hit the market some time in July 2010. The company had filed the DRHP in July 2008, but could not launch its public issue because of market volatility.

A source said the company had cut down the size of its issue to Rs200 crore from around Rs300 crore it had envisaged earlier. The proceeds from the IPO are intended to fund the setting up of a diamond processing unit at an SEZ in Surat, a jewellery manufacturing unit, and the expansion of its retails outlets.

Similarly, the Gujarat Pipavav Port, the developer and operator of APM Terminals in Pipavav, is expected to raise around Rs500 crore from its public issue. The company had filed its DRHP in December 2009, mostly for prepayment of loans and investment in equipment and expenditure.

In all, some 30 medium- and large-scale companies in the country are waiting for the right time to foray into the capital markets with an estimated total issue size of over Rs35,000 crore. This excludes the companies which are a part of the Centre’s disinvestment plans.

The Union government is planning to raise around Rs30,000 crore in FY 2010-11 by selling its stake in public-sector enterprises.

This could take the total new issue size to well over Rs50,000 crore. Since July 2009, some 60 companies have sent their DRHPs to the Sebi.'

As for Aster Silicates, it filed its DRHP on January 4 this year and plans to raise about Rs50 crore through the IPO. The company hopes to expand the capacity of its Bharuch unit to increase the production of sodium silicate six fold, from the existing 50 MTPD to 350 MTPD.    

“We will continue to see a surge in the number of IPOs in 2010, unless there are market corrections between April-June 2010,” said Karnik Shah, the director of Navkar Share & Stock Brokers Ltd. “With the economy recovering, business enterprises require funds for expansion and to tap capital markets. The Gujarat-based companies have done well and their investors have been rewarded too.”

Chiripal Industries, however, may have to wait for about three to six months for its IPO. The company had filed its DRHP two years ago and plans to raise around Rs120 crore to set up new yarn and fabric dyeing facilities, a weaving facility, and the expansion of its POY, FDY and textured yarn facilities. It will also set up a 7.5 MW lignite-based power plant.