Ramdevbaba Solvent is launching an Initial Public Offering (IPO) valued at Rs 50.27 crores, consisting entirely of a fresh issue of 59.14 lakh shares. The subscription for this IPO commences on April 15, 2024, and concludes on April 18, 2024. Allotment is anticipated to be finalized by Friday, April 19, 2024.

Ramdevbaba Solvent is scheduled to be listed on the NSE SME on Tuesday, April 23, 2024. The price band for the IPO is set between ₹80 to ₹85 per share, with a minimum lot size for application set at 1600 shares. Retail investors are required to invest a minimum of ₹136,000, while High Net Worth Individuals (HNIs) must invest in a minimum of 2 lots, totaling 3,200 shares amounting to ₹272,000.

Choice Capital Advisors Pvt Ltd serves as the book running lead manager for the Ramdevbaba Solvent IPO, with Bigshare Services Pvt Ltd acting as the registrar for the issue. Choice Equity Broking has been appointed as the market maker for the IPO, ensuring smooth trading activities.

The Issue comprises of fresh Issue of up to 59,13,600 Equity Shares at an Issue Price of ₹ 85/- per Equity Share, aggregating up to ₹ 50.25 Cr.

Company will utilize the Net Proceeds:

1. Setting up of new manufacturing facility
2. Repayment in full or in part, of certain of outstanding borrowings
3. Funding the working capital requirements
4. General corporate purposes.

Listing will enhance corporate image and visibility of brand name, along with listing benefits to the shareholders.

Setting up of new manufacturing facility: As a part of growth strategy, company is establishing a new manufacturing facility of corn extraction having a capacity of 300 tons per day, which will increase the present capacity and subsequently boost sales and profitability.

Read more

About Ramdevbaba Solvent Limited

The company is in the business of manufacturing, distribution, marketing and selling of Physically Refined Rice Bran Oil (“Rice Bran Oil”). They manufacture and sell Rice Bran Oil to FMCG companies like Mother Dairy Fruit & Vegetable Private Limited, Marico Limited and Empire Spices and Foods Ltd. Along with this they also manufacture, market and sell Rice Bran Oil under own brands “Tulsi” and “Sehat” through 38 distributors who in turn sell to various retailers across Maharashtra.

Apart from this they also produce De-oiled Rice Bran (DORB), which is a by-product and is sold as cattle feed, poultry feed and fish feed in the States of Maharashtra, Goa, Gujarat, Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, Kerala and Tamil Nadu. Other by-products such as fatty acid, lecithin, gums, spent earth and wax are sold in the open market.

Company owns and operate two Manufacturing Facilities, 1 in Mahadula and 1 in Bramhapuri near Nagpur, in the State of Maharashtra, which are strategically located in Central India.

Rice bran oil is extracted from the hard outer brown layer of rice after chaff or rice husk. It is well known for its high smoke point of 232 °C i.e. 450 °F and mild flavour, making it fit for high-temperature cooking methods.

As per Final Estimates for 2022-23 released on October 18, 2023, total production of rice during 2022-23 is estimated at record 1,357.55 Lakh tonnes. It is higher by 62.84 Lakh tonnes than the previous year’s Rice production of 1294.71 Lakh tonnes and by 153.65 Lakh tonnes than the last five years’ average production of 1,203.90 Lakh tonnes.

Maize is the third most important cereal crop in India after rice and wheat. It accounts for around 10 percent of total food grain production in the country. India is also the fifth largest producer of Maize in 2020 as per FAO data and India’s share in world production accounted to be 2.59 per cent in the same year. As per Final Estimates for 2022-23 released on October 18, 2023, the estimated production of maize during 2022-23 is 380.85 Lakh tonnes.

Edible oils and Fats are essential ingredients for a wholesome and balanced diet and they are vital items of mass consumption. There are two sources of oils viz. primary source and secondary source. The primary sources of oil are nine principal oilseeds viz. groundnut, rapeseed/mustard, soyabean, sunflower, sesame, niger, safflower, castor and linseeds. Edible oils obtained through secondary sources include coconut, cottonseed, palm, rice bran and oilseed cakes.

Risk associated to the issue:

Inability to comply with repayment and other covenants in the financing agreements: Company has entered out financing arrangements with certain banks for working capital facilities, term loans and vehicle loans. As of March 15, 2024, company had total secured borrowings of ₹ 8,621.12 lakhs. The agreements with respect to borrowings contain restrictive covenants.

Limited Geographies: Majority of revenues comes from customers located in Maharashtra, Andhra Pradesh & Uttar Pradesh. For the nine months ended December 31, 2023 Maharashtra holds 51.54% of revenue, Andhra Pradesh holds 26.48% and Uttar Pradesh holds 4.95%.

Dependent on limited suppliers for raw materials: The company is dependent upon certain suppliers for the supply of raw materials majority of which are from the states of Maharashtra, Madhya Pradesh, Chhattisgarh and Gujarat. In the event of shortage of raw materials with these suppliers company may be unable to meet production schedules.

Dependent on sale to FMCG companies: Company supply rice bran oil in bulk to certain leading FMCG companies like Mother Dairy Fruit & Vegetable Private Limited, Marico Limited and Empire Spices and Foods Ltd aggregating to approximately 35% of the revenue for the sub period ended 31^st Dec’23. And the company also don’t have long term contracts. Apart from these FMCG customers, company’s own brands holds about 8-10% of revenue.

De-Oiled Rice Bran (DORB) significant portion in revenues: It approximately holds 45% of revenue.

Business require significant working capital: Business operation requires significant working capital specifically for raw materials and finished goods to undertake manufacturing operations. The working capital requirements for FY 2025 of Company is estimated at ₹ 1,200.00 lakhs and will be funded out of the Net Proceeds.

Failure of setting up of the Ethanol manufacturing unit: The company is setting up corn de-oiling manufacturing facility, adjoining our existing manufacturing unit at Brahmapuri, this is done by RBS Renewables Private Limited, an Associate company. Ramdevbaba solvent ltd. has 30% stake in the same.

The company operates in a highly regulated and lobo intensive industry: Operations are subject to extensive government regulations. Operations are subject to evolving health, safety and environmental laws and regulatory standards. The company’s manufacturing activities are labor intensive. Strikes and other labor actions may have an adverse impact on our manufacturing operation.