Chaman Metallics SME
Listing performance
Scheduled dates
Tentative timetable — a past date is not confirmation the step completed
Issue details
- IPO date
- 04 Jan 2023 – 06 Jan 2023
- Listing date
- 16 Jan 2023
- Face value
- ₹10 per share
- Issue price
- ₹38 per share
- Lot size
- 3,000 shares
- Total issue size
- ₹24.21 Cr
- Market cap at offer price
- ₹91.71 Cr
- Promoter holding
- 100.00% → 73.60% pre-issue → post-issue
- ISIN
- INE06PV01010
- Registrar
- MUFG Intime India Pvt.Ltd.
- Lead managers
- Hem Securities Ltd.
- Registered office
- A-26, M.I.D.C, Tadali Growth Centre, Tadali, Chandrapur, Maharashtra
Reservation and application size
How the issue is split between investor categories, and what each may bid
| Investor category | Shares | % of net | % of total |
|---|---|---|---|
| Market maker | 3,24,000 | — | — |
Application size
Minimum 3,000 shares per lot, in multiples, at ₹38
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (min) | 1 | 3,000 | ₹1,14,000 |
| S-HNI (min) | 2 | 6,000 | ₹2,28,000 |
| S-HNI (max) | 8 | 24,000 | ₹9,12,000 |
| B-HNI (min) | 9 | 27,000 | ₹10,26,000 |
Category limits
| Category | Bid size | Cut-off |
|---|---|---|
| Retail (RII) | Up to ₹2 lakh | Yes |
| Small HNI (sNII) | ₹2 lakh – ₹10 lakh | No |
| Big HNI (bNII) | Above ₹10 lakh | No |
| Employee | Up to ₹5 lakh | Yes |
Bidding at cut-off means accepting the final issue price without naming one. Only retail and employee applicants may do so.
Valuation and performance
Valuation at offer price
| Metric | Pre-issue | Post-issue |
|---|---|---|
| EPS (₹) | 5.26 | — |
| P/E (×) | 7.22 | — |
| Market cap | — | ₹91.71 Cr |
Key performance indicators
- Return on net worth
- 24.54%
- ROCE
- 25.72%
- Debt / equity
- 0.66
- PAT margin
- 5.04%
- NAV per share
- ₹21.44
Single period as reported. Year-on-year movement is in the financials table below, where every period is published.
About Chaman Metallics SME
Incorporated on November 10, 2003 as 'Chaman Metallics Private Limited' and converted into a public limited company on April 22, 2008, Chaman Metallics Limited (CML) is engaged in the manufacturing and selling of Direct Reduced Iron (sponge iron). The company was under the control of the MSP Group from 2006 to 2019 and was acquired in 2019 by the Raipur-based GR Group (in the steel business since 1996) pursuant to a Share Purchase Agreement dated March 14, 2019, under which the entire issued capital of 78,94,562 equity shares was transferred for Rs. 20.50 crores. Its sole manufacturing unit at A-26, M.I.D.C, Tadali Growth Centre, Chandrapur, Maharashtra, spread over about 63 acres, operates two rotary kilns (2 x 100 MTPD) with an aggregate installed capacity of 72,000 MT per annum for sponge iron, producing dolochar as a by-product; the company holds ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certifications and employed 39 people as on August 31, 2022. It earns money by selling sponge iron to steel producers (mainly in Maharashtra, Odisha and Chhattisgarh, including customers such as Rajesh Steel & Wire Industries (New), R.K. Steel Sales, SMW Ispat Pvt Ltd and Gajkesari Steels & Alloys Pvt. Ltd.) through short-term purchase orders rather than long-term contracts, with sponge iron contributing 97.94% of FY2022 revenue of Rs. 18,486.79 lakhs and dolochar/other items the balance; restated profit after tax was Rs. 934.65 lakhs in FY2022.
Company Analysis
from DRHPChaman Metallics Limited manufactures and sells Direct Reduced Iron (sponge iron), the key raw material used by steelmakers in electric arc and induction furnaces, from its Chandrapur, Maharashtra facility.
Incorporated on November 10, 2003 as 'Chaman Metallics Private Limited' and converted into a public limited company on April 22, 2008, Chaman Metallics Limited (CML) is engaged in the manufacturing and selling of Direct Reduced Iron (sponge iron). The company was under the control of the MSP Group from 2006 to 2019 and was acquired in 2019 by the Raipur-based GR Group (in the steel business since 1996) pursuant to a Share Purchase Agreement dated March 14, 2019, under which the entire issued capital of 78,94,562 equity shares was transferred for Rs. 20.50 crores. Its sole manufacturing unit at A-26, M.I.D.C, Tadali Growth Centre, Chandrapur, Maharashtra, spread over about 63 acres, operates two rotary kilns (2 x 100 MTPD) with an aggregate installed capacity of 72,000 MT per annum for sponge iron, producing dolochar as a by-product; the company holds ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certifications and employed 39 people as on August 31, 2022. It earns money by selling sponge iron to steel producers (mainly in Maharashtra, Odisha and Chhattisgarh, including customers such as Rajesh Steel & Wire Industries (New), R.K. Steel Sales, SMW Ispat Pvt Ltd and Gajkesari Steels & Alloys Pvt. Ltd.) through short-term purchase orders rather than long-term contracts, with sponge iron contributing 97.94% of FY2022 revenue of Rs. 18,486.79 lakhs and dolochar/other items the balance; restated profit after tax was Rs. 934.65 lakhs in FY2022.
Objects of the Issue
- Funding the working capital requirements of the Company (investment in trade receivables and inventories and funding day-to-day operations) p.78
- General Corporate Purposes p.80
- Meeting the expenses of the Issue (public issue expenses) p.80
Issue Structure
- Total Issue
- Initial Public Offer of upto 63,72,000 Equity Shares of face value Rs. 10/- each, aggregating up to Rs. [●] Lakhs (issue price Rs. [●] per share); the Public Issue constitutes 26.40% of post-issue paid-up equity share capital
- Fresh Issue
- Entire issue is a fresh issue of upto 63,72,000 Equity Shares
- Offer for Sale
- Nil (not applicable — the entire issue constitutes a fresh issue of equity shares)
- Face Value
- Rs. 10/- each
Business Model
Revenue is earned by manufacturing sponge iron (Direct Reduced Iron) in coal-fired rotary kilns at the Chandrapur plant and selling it to steel manufacturers in electric arc and induction furnaces, primarily in Maharashtra, Odisha and Chhattisgarh, supplemented by sale of the dolochar by-product and other items (iron ore fines, dust, waste & scrap); in Fiscal 2022 sponge iron contributed 97.94% of revenue from operations of Rs. 18,486.79 lakhs, dolochar 0.99% and other items 1.06%.
Business Segments
SWOT Analysis
- • Strategically located Chandrapur manufacturing unit near local coal, iron ore and dolomite mines, lowering procurement and logistics costs(p.101)
- • Stringent quality control via in-house testing laboratory; ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certified(p.102)
- • Long-standing customer relationships supporting uninterrupted supplies and repeat business(p.102)
- • Experienced, promoter-led management team with deep steel-industry expertise(p.102)
- • Track record of robust financial performance and improving profitability over the last three fiscals(p.101)
- • High customer concentration - top 5 customers were 76.58% of FY22 revenue, with no firm commitments(p.24)
- • Negative EBITDA/PBT in FY2019-20 and negative operating cash flow in FY2021-22(p.29)
- • Total outstanding indebtedness of Rs. 2,515.81 lakhs creating debt-service obligations(p.34)
- • Unsecured loans of Rs. 1,348.30 lakhs that lenders may recall at any time(p.32)
- • Single-plant concentration - all manufacturing operations at Chandrapur, Maharashtra(p.29)
- • History of capacity under-utilization (46.46% in FY2020)(p.28)
- • Heavy dependence on promoters/key managerial personnel Chetan Agrawal and Keshav Kumar Agrawal(p.30)
- • Promoter-group entities run the same sponge iron business with no non-compete agreements(p.31)
- • Capacity expansion to 1,87,500 MTPA sponge iron with vertical integration into Silico Manganese, Ferro Silicon, Billets and a 30 MW captive power plant(p.103)
- • Rising Indian finished steel consumption projected to reach 230 MT by 2030-31(p.92)
- • Government post-COVID infrastructure investment programme driving steel demand(p.92)
- • National Steel Policy 300 MTPA capacity build-up implies large sector investment opportunity(p.92)
- • Stated strategy of continuous cost-efficiency gains to lift volumes and margins(p.103)
- • Volatility in supply and pricing of key inputs (iron ore and coal)(p.25)
- • Cyclical downturns in the steel sector reducing demand for sponge iron(p.26)
- • Competition from resource-rich organized players and low-priced unorganized players(p.29)
- • Changing laws, rules and regulatory/tax uncertainties in India (including GST)(p.38)
- • Unpredictable impact of the COVID-19 pandemic on business and operations(p.37)
- • Slowdown in Indian economic growth or higher inflation affecting input prices and demand(p.38)
- • Natural calamities adversely affecting the Indian economy and the business(p.39)
Promoters
| Name | Role | Pre-Issue | Post-Issue |
|---|---|---|---|
| Chetan Agrawal | Promoter (also Chairman & Managing Director) | 0.83% | — |
| Keshav Kumar Agrawal | Promoter (also Joint Managing Director & CFO) | 0.83% | — |
| G.R. Sponge and Power Limited | Promoter (Corporate Promoter) | 19.40% | — |
| N.R. Sponge Private Limited | Promoter (Corporate Promoter) | 19.43% | — |
| Aryabhatt Sales Private Limited | Promoter Group | 19.26% | — |
| Amita Agrawal | Promoter Group | 0.83% | — |
| Ramesh Kumar Agrawal | Promoter Group (also Non-Executive Director) | 0.83% | — |
| G.R. Minerals and Industries Private Limited | Promoter Group | 19.34% | — |
| G.R. Ecotech Private Limited | Promoter Group | 19.24% | — |
Leadership
Auto-extracted from the company's DRHP using AI, with each fact linked to its source passage (hover any row to see the quote & page). Provided for research only, not investment advice — verify against the official DRHP before relying on it.