Metal recycling company CMR Green Technologies has filed a draft red herring prospectus (DRHP) with the domestic market regulator, Securities Exchange Board of India (SEBI), for an initial public offering (IPO). Here’s all you need to know about the IPO.
IPO details
- Company name: CMR Green Technologies Limited
- IPO size: Not announced
Issue highlights
- Fresh issue: ₹300 crore
- Offer for sale: 33,414,138 equity shares
- Price band: Not announced
- Lot size: Not announced
- Face value: ₹2
- Minimum price: Not announced
- Maximum price: Not announced
IPO timeline
- Start date: Not announced
- End date: Not announced
- Tentative allotment date: Not announced
- Tentative refund credit: Not announced
- Listing date: Not announced
Registrar information
- Registrar Name: KFin Technologies Private Limited
- Concerned Person Name: Lohit Chhabra, Company Secretary and Compliance Officer
- Email: complianceofficer@cmr.co.in
- Contact Number: +91 129 422 3050
Key highlights
- Fresh issue of equity shares aggregating to ₹300 crore
- Offer for sale of up to 33,414,138 equity shares
- A pre-IPO placement maybe undertaken by the company for a sum aggregating to ₹60 crore
- Offer for sale comprises shares of promoters and selling shareholders including Gauri Shankar Agarwala, Mohan Agarwal, Kalawati Agarwal and Pratibha Agarwal
- Shares will be listed on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange)
- The lead managers of the stock issue are ICICI Securities, JM Financial, and Axis Capital
Reasons for going public
CMR Green Technologies plans to use the proceeds from the public issue
- To repay certain borrowings
- For general corporate purposes
Company fundamentals
Before investing in an IPO, one should understand the company fundamentals.
Top shareholders of the company are:
| Shareholder name | Equity shares (%) |
| Gauri Shankar Agarwala | 8.72 |
| Mohan Agarwal | 10.31 |
| Suvridhi Financial Services Limited | 11.92 |
| Grand Metal Recycling Private Limited | 20.91 |
| Kalawati Agarwal | 5.19 |
| Pratibha Agarwal | 6.99 |
| Sanjivani Non Ferrous Trading Private Limited | 8.72 |
| Global Scrap Processors Limited | 13.42 |
| Forever Multimedia Private Limited | 6.54 |
Company financials
Here’s a look at the company’s financial status:
| Particular (₹ crore) | FY21 | FY20 | FY19 |
| Revenue from operations | 2,913.20 | Not available | Not available |
| Total Profit | 40.73 | 0.12 | 0.04 |
Company overview
CMR Group commenced business in 2006. It is a producer of aluminum and zinc die-casting alloys with a combined annual capacity of over 310,700 metric tonnes approx. It currently operates through 12 manufacturing facilities. Out of which 10 are aluminum recycling operations targeted towards the automotive manufacturing sector in India and overseas.
The company sells stainless steel, copper, brass, zinc and other metals to various manufacturers that further use these metals as raw material for their foundries. Some of the customers that the company caters to include Jindal Stainless Limited and Agrawal Metal Works Limited.
Industry outlook
A rise in demand from sectors such as construction, packaging, and consumer durables has upturned the demand for primary and secondary aluminum. According to the DRHP, the total demand for aluminum in India in fiscal year (FY) 2020 is estimated at 3.7 million tonnes, logging a CAGR of 5-6% during FY 2015–2020.
Competitive strengths
CMR Green Technologies has managed to set itself apart in the following ways:
- One of the largest domestic aluminium recyclers in India
- Maintains strong relationships with key customers including Maruti Suzuki, Sunbeam Auto, Yamaha, Rico Auto, and Rockman Industries, among others
- Strives to focus significantly on supply of liquid aluminium
- Partners with other companies in the aluminium recycling industry
- Sources raw materials from diversified suppliers to grow and develop business
Opportunities
- Establish a strong presence in the recycled aluminium industry
- Anticipate of leadership in key product segments will increase business and customer base
- Expand business through exports
- Diversify supplier base to minimize risk
- Capitalize on future trends by investing and expanding technological capabilities
Threats
- New entrants into the market
- Reliance on fluctuating scrap markets
- Inability to hold agreements with raw material suppliers
- Volatile raw material supply and pricing
- Inability to adjust prices of finished products against raw materials
Risks
- Risk of impurities in secondary aluminium
- Dependent on limited number of customers
- Urgo Capital has initiated legal proceedings against the company
- Inability to accurately forecast demand for products
- Dependent on third party transportation to procure raw materials and supply products
- Breakdown or failure of equipment, power supply, or processes could significantly affect business operations
- Outstanding litigation against the company