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Salient features of the IPO:

* Specialty chemical manufacturer, Aether Industries Ltd. (Aether), is coming up with an IPO to raise around Rs. 800cr, which opens on 24th May and closes on 26th May 2022. The price band is Rs. 610 - 642 per share.

* The company has executed a pre-IPO placement on 5 th May 2022, and allotted 0.202cr share at Rs. 642 per share. Total amount collected from the pre-IPO placement was Rs. 130cr. Consequently, it has reduced the fresh issue size from Rs. 757cr (as mentioned in DRHP) to current Rs. 627cr.

* The IPO is a combination of fresh issue and OFS portion. The company will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs. 163cr will be used to fund the proposed greenfield expansion; Rs. 137.9cr will be utilized for repayment/prepayment of the borrowings and rest Rs. 165cr will be used to fund the working capital requirement of the company.

Key competitive strengths:

* Differentiated portfolio of market-leading products

* Focus on R&D to leverage the core competencies of chemistry and technology

* Long standing relationshipswith a diversified customer base

* Synergistic business models focused on large scale manufacturing, CRAMS and contract manufacturing

* Focus on quality, environment, health and safety

* Strong and consistent financial performance

* Experienced promoters and senior management with extensive domain knowledge

Risk and concerns:

* Unfavorable government policies and regulations

* Revenue concentration risk

* Unfavorable sales-mix

* Unfavorable forex movements

* Unfavorable movements in the prices of key raw materials and of international crude

* Delay in expanding the capacity

* Competition

Below are the key highlights of the company:

* Over 2020-25, the global and Indian specialty chemical market is expected to grow by 5.2% and 11.2% CAGR, respectively. Indian specialty chemicals market expansion is likely to be led by both domestic consumption and exports. Demand of the specialty chemicals from the Agrochemicals & fertilizers and Pharmaceuticals sector (which together consumed for over half of the produce) are likely to expand by 10.1% and 11.4% CAGR.

* Aether, which generated around 85-90% of business from the Pharmaceuticals and Agrochemicals sector is one of the fastest growing specialty chemical companies in India, growing at 49.5% CAGR between FY19-21. It is a specialty chemical manufacturer, focusing on producing advanced intermediates and specialty chemicals involving complex & differentiated chemistry and technology core competencies.

* The company’s business was started in 2013, while revenue generation operations commenced from FY17. Aether has three operating business models i.e. large scale manufacturing of its own intermediates & specialty chemicals; CRAMS and contract/exclusive manufacturing. In FY21, these business verticals contributed 72.2%, 19.4% and 8%, respectively, to the consolidated revenue.

* Aether’s CRAMS business clientele includes Adama Group, Altana AG, Aramco Performance Materials LLC, Austin Chemical Company, Inc., Avient Corporation, BYK Chemie GmbH, Connect Chemicals, Milliken & Co., Polaroid Film BV, and Tosoh FineChem Corporation. Contract/exclusive manufacturing clientele includes Adama Group, Altana AG, BYK Chemie GmbH, Divis Laboratories Ltd., Dr. Reddy’s Laboratories Ltd., Moehs Iberica SL and UPL Ltd.

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