Tatva Chintan Pharma IPO


Yet another IPO of Specialty Chemicals…

About the Company: Tatva Chintan was incorporated on June 12, 1996. It is a speciality chemical manufacturing company engaged in manufacturing of a diverse portfolio of:

1. Structure Directing Agents (“SDAs”) – molecule structures used as absorbents and catalyst supports.

2. Phase Transfer Catalysts (“PTCs”) – used to facilitate the migration of a reactant from one phase into another phase where the reaction occurs.

3. Electrolyte salts for Super-capacitor batteries (“SCB”) – These salts help conduct electric current in Super-capacitors. Super-capacitors are storage bigger than batteries to hold a charge.

4. Pharmaceutical and Agrochemical intermediates and other speciality chemicals (“PASC”) – manufacture of various pharmaceutical and agrochemical products as intermediates, disinfectants and catalysts, and solvents.

Tatva Chintan is the largest and only commercial manufacturer of SDAs for zeolites (Zeolites are used as agents in detergents, and water and air purifiers. According to a Business Standard report, it is also used in the production of medical-grade oxygen) in India and enjoys the second-largest position globally. As of March 31, 2021, the company has manufactured over 154 products. They are the largest producer of PTCs in India and also among the global leaders. They focus on products that form a key ingredient to their customer's manufacturing and industrial processes. The company serves customers across various industries, including automotive, petroleum, pharmaceutical, agrochemicals, paints and coatings, dyes and pigments, personal care, and flavour and fragrances industries.

The company currently operates through 2 manufacturing facilities in Gujarat. They have set up wholly-owned subsidiaries in the USA and Netherland too. Apart from the supply in India, they export their products to over 25 countries, including the USA, China, Germany, Japan, South Africa, and the UK. Customers include Merck, Bayer AG, Asian Paints, Ipox Chemicals KFT, Laurus Labs., Tosoh Asia, SRF, etc.

The speciality chemicals companies enjoy strong entry barriers in the form of vendor acquisition, lengthy and complex product approval, registration process, customer loyalty among others. These barriers help the companies to ensure sustainable growth.

Courses

Application of Company’s Products:

The company’s SDA and PTC products have various applications in green chemistry, which is pertinent considering the growing focus on green and sustainable technologies. The production of SDAs and electrolyte salts for super-capacitor batteries requires strong technical know-how and sound technical expertise. Their R&D capabilities and technical expertise has enabled them to become one of the leading manufacturers of SDAs for zeolites and PTCs in the world.

Strong R&D capabilities:

R&D efforts mainly focus on the development of new products, improvement of existing production processes, adoption of advanced production technology, and improvement in the quality of existing products. The company has developed 82 products since March 31, 2011, and these products have contributed to 23.19%, 20.75%, and 12.88% of total revenue, in the Fiscals 2021, 2020, and 2019 respectively.

IPO Details:

It’s a fresh issue of Rs 225 crores and OFS of Rs 275 crores aggregating to a total issue size of Rs 500 crores. The price band of the shares is Rs 1073 - Rs 1083 per share and the lot size is 13 shares.

Funding capital expenditure requirements for:

1. Expansion of Dahej Manufacturing Facility 

2.Upgradation of R & D facility at Vadodara

3. General Corporate purpose

IPO opens on July 16, 2021, and ends on July 20, 2021, and the listing date will be July 29, 2021.

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