Vraj Iron and Steel eyes ₹171 crore via IPO, price band set at ₹195-₹207 per share

Vraj Iron and Steel, a leading manufacturer of sponge iron, has announced its IPO with an aim of raising ₹171 crore from the public issue. The IPO will be open for subscription on 26 June, 2024, and will close on 28 June, 2024. The price band of the IPO is set at ₹195 - ₹207 per equity share.

IPO details

The IPO will be conducted through a book-building process, a method primarily used in IPOs to determine the price and demand for shares. The IPO allocation is divided in a way that up to 50% of the net issue will be allocated to qualified institutional buyers (QIBs) on a proportionate basis. Additionally, a minimum of 35% is allocated to retail investors and 15% is reserved for non-institutional investors (NIIs).

The minimum investment requirement for retail investors is ₹14,904 with a lot size of 72 shares. On the other hand, the small non-institutional investors (SNIIs) have a minimum lot size of 1,008 shares translating to an investment of ₹208,656.

The funds raised from the IPO will be used for the expansion of the Bilaspur plant project. This project further aims to increase the company’s manufacturing capacity. Apart from this, the raised capital will also be used to repay or prepay borrowings from HDFC Bank, which were previously utilised for capital expenditure at the Bilaspur plant. Further, any remaining funds will be used for the general corporate purposes.

Vraj Iron and Steel operates two manufacturing plants located in Raipur and Bilaspur in Chhattisgarh with a total area of 52.93 acres. The combined installed capacity of these plants as of 31 March 2023, was 231,600 tons per annum (TPA) for both intermediate and final products. The company is aiming to expand projects with a motive of increasing its production capacity. Therefore, this project in Bilaspur will elevate the total installed capacity to 500,100 TPA. Additionally, the capacity of its captive power plant will expand from 5 MW to 20 MW. These expansions are aimed to be operational within the current fiscal year.

The book-running lead manager for the company’s IPO is Aryaman Financial Services Limited, whereas Bigshare Services Private Limited will act as the registrar.