Vraj Iron and Steel Files DRHP for Rs 171 Crore IPO: Aiming for Expansion and Debt Repayment

Chhattisgarh-based Vraj Iron and Steel has made a significant move in the capital market by filing its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) to raise Rs 171 crore. The IPO comprises a fresh issuance of shares and does not include an offer-for-sale (OFS) component.

In a bid to bolster its financial position, Vraj Iron and Steel is considering a pre-IPO placement of Rs 34 crore in consultation with its merchant banker before formally submitting the red herring prospectus to the Registrar of Companies.

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The company, promoted by Gopal Sponge and Power, V A Transport, and Vijay Anand Jhanwar, has earmarked a significant portion of the net fresh issue proceeds, totaling Rs 129.5 crore, for repaying debts acquired for the expansion project at its Bilaspur plant, along with capital expenditures for the expansion project itself. The remaining funds will be allocated towards general corporate purposes and issue expenses.

Vraj Iron and Steel operates two manufacturing plants in Chhattisgarh, located in Raipur and Bilaspur, where it specializes in producing sponge iron, M S billets, and TMT bars under the brand name Vraj. As of March 2023, the company boasts a total installed manufacturing capacity of 2,31,600 tons per annum (TPA), encompassing intermediate and final products. Notably, the Raipur manufacturing plant includes a captive power plant with a capacity of 5 MW.

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The company is in the midst of a substantial capacity expansion plan, which aims to increase the aggregate installed capacity, including intermediate and final products, from 2,31,600 TPA to an impressive 5,00,100 TPA. Additionally, the captive power plant capacity is set to surge from 5 MW to 20 MW. These expansions are anticipated to become operational during the fiscal year 2024-25, providing Vraj Iron and Steel with the resources needed to meet growing demand.

Financially, the company has shown remarkable growth, reporting a net profit of Rs 54 crore for the fiscal year ended in March 2023, a significant increase from the Rs 28.7 crore profit recorded in the previous year. Similarly, the revenue from operations surged to Rs 515.7 crore during the same period, up from Rs 414 crore.

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Aryaman Financial Services has been appointed as the merchant banker for the upcoming IPO, reaffirming the company’s commitment to a successful and well-structured public offering. Vraj Iron and Steel’s IPO is expected to attract significant attention from investors eager to participate in the company’s growth and expansion plans.

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