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Salient features of the IPO:

• Gandhar Oil Refinery (India) Ltd. (GORIL), India’s largest white oil producer is coming up with an IPO to raise around Rs. 500cr, which opens on 22nd Nov. and closes on 24th Nov. 2023. The price band is Rs. 160 - 169 per share.

• The IPO is a combination of fresh and OFS issues. GORIL will not receive any funds from the OFS portion. However, from the fresh issue net proceeds, it will be utilizing Rs. 185cr for funding the working capital requirement, Rs. 27.7cr to fund the capital expenditure at the Silvassa plant and another Rs. 22.7cr will be used for investing in the subsidiary company, which in turn will prepay/repay the borrowing availed by it.

• Couple of promoter & promoter group (P&PG) entities are participating in the OFS and offloading 0.675cr shares. Post-IPO, the P&PG will have a 64.63% stake in the company. Consequently, the public stake will increase from current 12.5% to 35.37%.

Key competitive strengths:

• Leading market share of the Indian white oils market with significant overseas sales, focused on the consumer and healthcare end-industries

• Extensive and diversified customer base and a supplier base comprised of leading oil companies with competitive pricing terms

• Strategically located manufacturing facilities and in-house R&D capabilities

• Resilient, flexible and scalable business model with prudent risk management framework

• Track record of consistent financial performance

Risk and concerns:

• Exchange rate fluctuations in various currencies in which they do business could negatively impact the business

• Struggling to handle business growth or follow the plan can hurt the business

• Late deliveries, sudden price changes, or reduction in the supply of raw materials can hurt the business

• Rely on a few suppliers for a significant share of raw materials without long-term contracts

• Significant working capital requirements

Below are the key highlights of the company:

• Incorporated on October 7, 1992, GORIL stands as a revenue-leading manufacturer of white oils, with an expanding focus on consumer and healthcare sectors. As of June 30, 2023, their diverse product suite encompasses over 440 items, primarily spanning personal care, healthcare, performance oils ("PHPO"), lubricants, and process and insulating oils ("PIO") divisions, all under the distinguished "Divyol" brand. Renowned for their application as key ingredients, GORIL's products play a crucial role in the manufacturing processes of leading Indian and global companies across consumer, healthcare, automotive, industrial, power, and tyre and rubber sectors.

• With three decades of expertise in the specialty oils sector, the company has expanded its operations over the years, simultaneously enhancing efficiency and cutting costs. The journey began in 1993 with the establishment of the Taloja Plant, followed by the inauguration of the Silvassa Plant in 2000. Additionally, in 2017, the company ventured into the United Arab Emirates by establishing Texol, which has now become its subsidiary since March 30, 2022. This strategic growth reflects the company's commitment to advancing its presence and capabilities in the industry.

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