RASHTRIYA CHEMICALS AND FERTILIZERS LTD OFFER FOR SALE 29 - JUN

Transcription

1 RASHTRIYA CHEMICALS AND FERTILIZERS LTD OFFER FOR SALE 29 - JUN OFFER BACKGROUND The President of India (acting through and represented by the Ministry of Chemicals & Fertilizers, Government of India) (the "Seller") announced its intention to sell up to 2,75,84,405 equity shares of the Company of face value of INR 10/- each, representing 5% of the total paid up equity share capital of the Company (the "Offer Shares"), on June 29, 2017 (for non-retail Investors) and June 30, 2017 (for Retail Investors and for non-retail Investors who choose to carry forward their bids) in accordance with SEBI circular no. CIR/MRD/DP/18/2012 dated July 18, 2012 regarding Comprehensive Guidelines for Offer for Sale of Shares by Promoters through the Stock Exchange Mechanism, as amended by SEBI circular no. CIR/MRD/DP/36/2016 dated February 15, 2016, SEBI circular no. CIR/MRD/DP/12/2015 dated June 26, 2015, SEBI circular no. CIR/MRD/DP/04/2013 dated January 25, 2013, SEBI circular no. CIR/MRD/DP/24/2014 dated August 8, 2014 and SEBI circular no. CIR/MRD/DP/31/2014 dated December 01, The particulars of the above offer for sale are attached to this notice. Further upto 5% of the Offer shares (over and above the number of Offer Shares) could be offered to eligible and willing employees of the company at a discount of upto 5% of the Cut-off Price subsequent to completion of the Offer. THE SYNOPSIS OF THE OFFER FOR SALE IS AS FOLLOWS: Stock Data Latest Data (As on June 28, 2017) Latest Equity(Subscribed) Latest Reserve Latest EPS -Unit Curr Latest Bookvalue -Unit Curr Face Value Stock Exchange BSE Latest Market Price--Unit Curr Latest P/E Ratio Latest P/BV Week High -Unit Curr Week High-Date 15/05/2017 All Time High -Unit Curr All Time High-Date 07/01/ Week Low -Unit Curr Week Low-Date 21/11/2016 All Time Low -Unit Curr All Time Low-Date 19/10/2000 Market Capitalisation Dividend Yield -% 1.38 Name of the Seller (Promoter/Promoter Group) The President of India, acting through and Name of the company whose shares are proposed to be sold and ISIN Name of the stock exchanges where orders shall be placed Name of the designated stock exchange represented by the Ministry of Chemicals & Fertilizers, Government of India. Rashtriya Chemicals and Fertilizers Limited BSE and NSE Date and time of opening and closing of For Non-retail : June 29, 2017 the sale Allocation Methodology Number of shares proposed to be sold by the seller pursuant to the sale Name of the broker(s) on behalf of the Seller (the "Seller's Broker") Floor Price BSE Open: 9.15 a.m., Close: 3.30 p.m. For retail+non-retail : June 30, 2017 Open: 9.15 a.m., Close: 3.30 p.m. 20% of the Offer Shares being offered in the Offer shall be reserved for Retail Investors, subject to receipt of valid bids. Retail Investors will be allocated Offer Shares at a discount of 5% to the bid price entered by them in accordance with the SEBI OFS Circulars. Price priority method at multiple clearing prices 2,75,84,405 (approx. 5% of the total paid up equity share capital) SBICAP Securities Limited IDBI Capital Market and Securities Limited Rs.74.25/- Price movement Chart TOTAL & AVERAGES DELIVERABLE VOLUME (BSE) Total Avg No. Of Del. Volume Del. Volume Days Weekly Fornightly Monthly Quarterly Half Yearly Yearly

2 Key Findings Rashtriya Chemicals and Fertilizers Limited (RCF) is one of the most revered public sector undertakings in India. A Mini Ratna company, it has two manufacturing units, one at Trombay, in Mumbai which has completed 50 excellent years in the fertilizers and chemicals domain and the other at Thal in the Raigad district of Maharashtra. RCF has, over the last five decades, displayed a distinctive work culture and management style, a concern for the community and the environment, and of course, an innate affection for the farmer. The company is planning to undertake major projects by participating in the revival of closed fertilizer units, Additional Ammonia Urea project at Thal, Coal Based Fertilizer Plant at Talcher, and a Urea Plant in Iran for import of Urea to India through a JV. It is also carrying out a number of energy conservation projects which will improve the profitability of the Company in the coming years. Moreover, according to the management, it is also looking for opportunities for long term off take agreements for procurement of fertilizers, to ensure sustained growth. The government will sell over 2.75 crore equity shares in Rashtriya Chemicals and Fertilisers (RCF) on June for about Rs200 crore as part of its plan to divest shares in PSUs.The government currently holds 80% stake in RCF and will offload 5% through the Offer for Sale (OFS) route. According to crisil report, it is improving working capital position as a result of lower subsidy receivables, strong liquidity and expected improvement in operating performance over second half of fiscal 2017 and fiscal Working capital position for urea players including RCF has improved in fiscal 2017 as a result of part liquidation of past subsidy arrears. This is because of reduction in pooled gas prices that led to lowering of Government's subsidy bill as against relatively unchanged subsidy allocation for indigenous urea manufacturers for the fiscal. RCF's operating performance is expected to improve driven by higher capacity utilisation and lower energy consumption in second half of fiscal 2017, this is because both the Thal and Trombay plant were under scheduled maintenance shutdown during first half of fiscal Comments: The company has reported steady growth both in terms of revenue and profitability. During Q4FY17, it has reported 36% growth in bottom line with the help of 11% growth in topline on QoQ basis. Since last 2 quarters, company has reported good top line and bottom line growth. However, overall the company has reported a reasonably good year for the fertilizer industry with overall volumes rising. The domestic production of Urea witnessed healthy growth, driven by favorable policy changes of GOI and the Gas Pooling policy (which resulted in uniform gas costs for all gas- based units). Government of India, during the year has mandated 100% production of neem coated urea and according to management, Neem coating ensures slow release of nitrogen resulting in lower usage of urea, prevents leaching of soil nutrient and hinders diversion of urea for non-agricultural uses. This will reduce the consumption of urea by 10-15%. As far as environment is concerned, normal prilled Urea use-efficiency is 30 %( Paddy crop). The beginning of monsoon this year has been very encouraging with widespread good rains in the month of June and July. In case the normal rainfall continues during the balance monsoon period, management expects the systemic inventory levels to come down to more reasonable levels by the end of the kharif 2017 season. Based on current P/Ex of 24.59, we expect the stock to see a price target of Rs. 92 on its FY18E EPS of Approximately, 23% upside from the current market price of Rs.75.20/-. The Issue Size of the company is Rs 200 crore. P/E Chart Jun-14 5-Aug Sep Oct-14 1-Dec-14 6-Jan Feb Mar Apr-15 3-Jun-15 8-Jul Aug Sep Oct-15 3-Dec-15 8-Jan Feb Mar-16 3-May-16 7-Jun Jul Aug Sep-16 2-Nov-16 8-Dec Jan Feb Mar-17 8-May Jun Close Price 2

3 Shareholding Pattern (%) Description as on 31/03/ /12/ /09/ /06/2016 Total Foreign Total Institutions Total Non Promoter Corporate Holding Total Promoters Total Public & Others Public and holding more than 1% of the total number of shares Description as on 31/03/ /12/ /09/ /06/2016 LIC of India BSE DATA Date High -Unit Curr Low -Unit Curr Weekly Monthly Month Month Year Quarterly result Qtr Ending Mar.17 Qtr Ending Mar.16 VAR % Total Income OPM (%) OP Other income PBIDT Net Finance Charges PBDT Depreciation PBT Tax expense PAT

4 BalanceSheet SOURCES OF FUNDS : SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Other Liabilities Total Liabilities APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Capital Work in Progress Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Other Assets Total Assets Contingent Liabilities

5 Profit and Loss Account SOURCES OF FUNDS : (12) (12) (12) (12) (12) INCOME : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE : Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Administration Expenses Miscellaneous Expenses Less: Pre-operative Expenses Capitalised Total Expenditure Operating Profit Interest Gross Profit Depreciation Profit Before Tax Tax Deferred Tax Net Profit Net Profit after Minority Interest & P/L Asso.Co Extraordinary Items Adjusted Net Profit Cash Flow Statement Cash Flow Summary Cash and Cash Equivalents at Beginning of the year Net Cash from Operating Activities Net Cash Used in Investing Activities Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year

6 Ratios Key Ratios Debt-Equity Ratio Long Term Debt-Equity Ratio Current Ratio Turnover Ratios Fixed Assets Inventory Debtors Total Asset Turnover Ratio Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) Payout (%) researchfeedback@smcindiaonline.com Corporate Office: 11/6B, Shanti Chamber, Pusa Road, New Delhi Tel: Mumbai Office: Lotus Corporate Park, A Wing 401 / 402, 4th Floor,Graham Firth Steel Compound, Off Western Express Highway, Jay Coach Signal, Goreagon (East) Mumbai Tel: , Fax: Kolkata Office: 18, Rabindra Sarani, Poddar Court,Gate No.- 4, 5th Floor, Kolkata Tel: , Fax: SMC Global Securities Ltd. (hereinafter referred to as SMC ) is regulated by the Securities and Exchange Board of India ( SEBI ) and is licensed to carry on the business of broking, depository services and related activities. 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