Mumbai-based Bharat Wire Ropes has filed draft red herring prospectus (DRHP) with market regulator SEBI for its IPO. The company aims to raise INR70 crore through the issue, while the number of shares to be offered will be decided at a later stage. The IPO will be managed by Intensive Fiscal Services Private Limited and BOB Capital Markets Limited.
Issue structure
According to the prospectus filed with SEBI, promoter group owned 2.56 crore shares in the company leading to 87.34% shareholding. The promoter group is led by Gaji Mercantile Private Limited which holds substantially all the share of the promoter group. Motilal Oswal and Ramdev Agarwal led Visu Associates owns 18.37 lakh shares or 6.25% of the total shareholding. Remaining shares are held by the Shah family which was the promoter of Bharat Wire Ropes till 2010.
Use of funds
Bharat Wire Ropes IPO will primarily facilitate setting up of a new manufacturing plant at Chalisgaon, Maharashtra. Nearly INR60 crore have been allocated to part finance the 66,000 metric tonnes per annum (MTPA) plant which will be fully integrated in nature. Completion date of the new project is estimated to be 31 December 2016. The remaining amount left after issue related expenses will be used for general corporate purposes.
Financial performance
Bharat Wire Ropes has consistently made profits, although the amount has not been high. With a net profit margin of 1.8% in fiscal 2014, this is certainly not among the best of the choices in the IPO market. The low profitability is despite the fact that it counts Kone Elevators, Bajaj Electricals and Suzlon among its top clients.
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Bharat Wire Ropes’ consolidated financial performance (figures in INR crore) |
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| FY 2010/11 | FY 2011/12 | FY 2012/13 | FY 2013/14 | Nine months FY 2014/15 | |
| Total revenue | 76.99 | 77.02 | 74.40 | 82.29 | 67.84 |
| Total expenses | 74.38 | 74.01 | 72.23 | 79.87 | 65.16 |
| Profit/(loss) after tax | 1.77 | 2.14 | 1.48 | 1.50 | 1.70 |
Source: Bharat Wire Ropes DRHP
Company background
Bharat Wire Ropes is a wire rope and wires manufacturing company that caters to a wide range of industries including fishing, elevators, cranes, power transmission, suspension bridges, oil exploration, ports and shipping, mining, defence, and railways. Established in 1986, the company is now promoted by Murarilal Mittal, Usha Mittal, Manan Mittal, and Gaji Mercantile Private Limited.
The company’s existing steel wire rope manufacturing plant at Atgaon has an installed capacity of 12,000 MTPA. In addition, Bharat Wire Ropes has a Pyrolysis plant at Chalisgaon with an installed capacity of 1,260 MTPA. The plant produces oil which is used as fuel in its manufacturing process.
