Avtar Steel Ltd., a prominent manufacturer of stainless-steel long and wire products, has officially submitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI). The company aims to raise Rs 585 crore through a fresh issue of equity shares as part of its initial public offering (IPO).
In addition to the fresh issue, the proposed IPO will feature an Offer for Sale (OFS) of up to 50 lakh equity shares by a promoter selling shareholder. This move marks a significant step for Avtar Steel as it seeks to expand its operations and strengthen its financial position.
Strategic Use of IPO Proceeds
Avtar Steel has outlined three primary objectives for utilizing the net proceeds from the fresh issue:
- Capital Expenditure for New Division: A substantial portion of the funds will be allocated to part-finance the capital expenditure required for establishing a new Specialty Steel Melting Division. This facility is planned to produce special steel grades, including alloy steel, carbon steel, and valve steel, alongside stainless-steel blocks and blooms.
- Capacity Expansion: The company intends to expand the stainless-steel wire capacity at its existing Wire Rod and Bar Division, boosting its production capabilities.
- Debt Repayment: A segment of the proceeds will be used for the repayment or pre-payment, either in full or in part, of certain outstanding borrowings, aiming to improve the company's balance sheet.
Any remaining funds after these allocations will be directed towards general corporate purposes.
Listing and Lead Managers
The equity shares offered through the Avtar Steel IPO are slated for listing on both the BSE and the National Stock Exchange (NSE). Systematix Corporate Services Ltd and Elara Capital (India) Pvt Ltd have been appointed as the book-running lead managers for the issue, guiding the company through the IPO process.
Avtar Steel's Market Presence
With over three decades of experience, Avtar Steel has established itself in the manufacturing and development of stainless-steel long and wire products, including specialized grades. The company broadened its reach into international markets starting in 2010. Its diverse product portfolio serves a wide array of industries, such as automobiles, oil and gas, defence, aerospace, water solutions, energy, shipping, fabrication, construction, chemicals, and food and dairy. Key customers include Bansal Wire Industries Ltd, Goodluck India Ltd, and Stellaris Specialities India Ltd, among others.