Dharmaj Crop Guard Files DRHP with SEBI for Rs. 250 Crores to Rs. 350 Crores IPO

Dharmaj Crop Guard, an agrochemicals company, has filed its DRHP (draft red herring prospectus) with SEBI for an IPO (Initial Public Offering) that could raise Rs. 300 crores. It will comprise a fresh issuance of equity shares worth Rs. 216 crores and an OFS (offer for sale) by the company’s promoters consisting of 14.83 lakh equity shares.

Domadiya Artiben, Muktaben Jamankumar Talavia, Manjulaben Rameshbhai Talavia, Ilaben Jagdishbhai Savaliya are the promoters who will sell shares via OFS. The offer will also include a reservation for eligible employees.

Read the following sections to learn about Dharmaj Crop Guard and its upcoming IPO!

An Overview of the Company – Dharmaj Crop Guard

Founded in 2015 in Ahmedabad, Dharmaj Crop Guard is a fast-growing agrochemical company that manufactures, distributes and markets various agrochemical formulations. Its products include agricultural insecticides, rodenticides, herbicides, fungicides, plant growth regulators, antibiotics and micro fertilisers.

The company sells more than 150 trademark registered products to both B2C and B2B customers and caters to those involved in the horticulture, floriculture and crop industry. It has obtained 398 registrations from CIB&RC (Central Insecticide Board and Registration Committee) approved for sale in India and 191 agrochemical formulations approved for export.

Some of its popular branded formulations are:

• Lowak 2,4- D Amine Salt 58% Herbicides

• Lokraj Hexaconazole 5% SC Fungicides

• Nilaayan Thiamethoxam 30% FS Insecticides

• Greenoka Gibberellic Acid 0.001% L Plant Growth Regulators

• Suffar 90 Sulphur 90% WDG Micro Fertilizer

Dharmaj Crop Guard also provides crop protection solutions to farmers to help them maximise productivity and profitability. It produces cost-effective agrochemical products through its dedicated R&D Centres. The company has over 20 years of expertise in its relevant fields and various certifications, including ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015.

It also has an international presence, exporting its products to over 20 countries across the Middle East, Latin America, East Africa and Far East Asia. Its top exports are for Sri Lanka, Iraq and Somalia.

Dharmaj Crop Guard IPO at a Glance

Dharmaj Crop’s IPO will consist of a fresh issue of Rs. 2,160 million and an OFS of 14.8 lakh equity shares. The OFS will be made by the following shareholders:

• Muktaben Jamankumar Talavia offering 6,56,000 equity shares

• Manjulaben Rameshbhai Talavia selling 7,09,500 shares

• Ilaben Jagdishbhai Savaliya offering 30,000 shares

• Domadia Artiben selling 87,500 equity shares

The company will not receive any proceeds from its OFS. The equity shares of Dharmaj Crop Guard IPO will have a face value of Rs. 10/per share. This IPO could raise anywhere from Rs. 250 crores to Rs. 300 crores, according to various market sources.

This IPO will also have an employee reservation portion that will not exceed 5% of the company’s equity share capital (post-issue). Employees could be offered shares at a discounted price. Reservation for QIBs (Qualified Institutional Buyers), RII (Retail Individual Investors), and NIIs (Non-Institutional Investors) will not exceed 50%, 35% and 15%, respectively.

Proceeds for the fresh issuance of Dharmaj Crop Guard IPO will be used for the following purposes.

• For setting up a new manufacturing facility at Saykha, Bharuch in Gujarat (Rs. 104.96 crores)

• To fund the company’s incremental working capital needs (Rs. 45 crores)

• Partial or full repayment/prepayment of its borrowings (Rs. 10 crores)

• General corporate purposes (rest of the proceeds)

• Benefit from listing of the company’s stock on stock exchanges

Monarch Network Capital Ltd and Elara Capital (India) Pvt Ltd will be the book running lead manager (BLRM) of this issue, while Link Intime India will be the Registrar.

About the Company’s Financials – Dharmaj Crop Guard

Dharmaj Crop Guard’s saw its revenue grow from Rs. 198.22 crores in FY 2020 to Rs. 302.41 crores in FY 2021, a growth of 52.56%. Its profits in the same period increased by 94.85% to Rs. 20.92 crores from Rs. 10.73 crores.

The company’s profits came about as a result of higher institutional sales, the addition of more dealers and customers and an increase in sales of its branded products.

As per its latest financial statement in the DRHP, it generated Rs. 228.15 crores in revenues for the 7-month period ending in October 2021. Its profit after tax stood at Rs. 18.66 crores for April to October 2021.

The following table details this company’s financial performance for the past three years.

Parting Thoughts

There seems to be much potential in the global agrochemicals market, with India being the 4^th largest producer and a net exporter. There is a high possibility of an increase in domestic use of pesticides and other agrochemicals and growth in the international market. As such, one could say that there is potential in Dharmaj Crop Guard’s value.

However, before investing in the equity market, investors should always exercise due caution and do adequate research.

Frequently Asked Questions

1. What is the minimum investment amount and price band of Dharmaj Crop Guard IPO?

The company will decide the price band and minimum bid lot after consultations with its BRLMs. This information will be updated here as soon as it is announced.

2. Who are the customers of Dharmaj Crop Guard Limited?

This company sells its agrochemical formulations to individual farmers and B2B customers. It distributes agrochemical products through its network and provides crop protection solutions to farmers. It also sells insect and pest control chemicals to Public Health and Animal Health Protection.

3. What is the manufacturing capacity of the Dharmaj Crop Guard?

The company’s manufacturing facility at Ahmedabad has a total installed capacity of producing agrochemical formulations of 25,500 Metric Tonnes.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.