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Salient features of the IPO:

• Archean Chemical Industries Ltd. (ACIL), a specialty marine chemical manufacturer, is coming up with an IPO to raise around Rs. 1,460cr, which opens on 9th Nov. and closes on 11th Nov. 2022. The price band is Rs. 386 - 407 per share.

• India Resurgence Fund (under two schemes) and Piramal Natural Resources Pvt. Ltd., are the investor selling holders and are partially offloading their stake in the company. Post-issue, their stakes will fall to 11.20% and 4.16%, respectively, from 23.33% and 8.67%.

• The IPO is a combination of fresh and OFS issue. ACIL will not receive any proceeds from the OFS portion. Of the net proceeds from the fresh issue, around Rs. 645cr will be utilized for the redemption of non-convertible debentures and the residual fund will be used for general corporate purposes.

Key competitive strengths:

• Leading market position, expansion and growth in bromine and industrial salt

• High entry barriers in the specialty marine chemicals industry

• Established infrastructure and integrated production with cost efficiencies

• Focus on environment and safety

• Largest Indian exporter of bromine and industrial salt with global customer base

• Strong and consistent financial performance

• Experienced management team, promoters and financial investors and stakeholders

Risk and concerns:

• Unfavorable government policies & regulations

• Delay in capacity expansion

• Unsuccessful venture in the bromine derivative market

• Client revenue concentration risk

• Unfavorable sales-mix and sales realization

• Unfavorable forex rate variation

• Competition

Below are the key highlights of the company:

• As per the RHP, the global bromine market has grown by 2.3% CAGR over 2017-21 to USD 3.13bn. Owing to its wide application across sectors like electronics, oil & gas, agriculture, automotive and construction, the global bromine market is expected to grow by 5.8% CAGR over FY21-25 to reach a size of USD 3.9bn. India’s bromine production is from the underground brine mainly concentrated towards the western state of Gujarat. With abundant resources, the domestic bromine capacity has increased by 9.6% CAGR over 2008-20, while production has increased by 14.4% CAGR over FY15-21 to around 0.046mn tonnes. In terms of volume, ACIL commands leadership position in the domestic bromine merchant sales (43% market share) and is the biggest exporter of bromine (82.8% market share) in FY21.

• With consumption of 173mn tonnes, the global industrial salt has seen no major growth over 2017-19. However, it is expected to grow by 2.8% CAGR over 2020-25 to 185mn tonnes, mainly on the back of improved demand from oil & gas, chemicals, water treatment, de-icing market. ACIL was the leading & the largest industrial salt exporter in FY21.

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