City gas distribution company IRM Energy Ltd has filed initial papers with capital markets regulator Sebi to raise up to Rs 700 crore in an initial public offering (IPO).

The IPO is a new issue of up to 1.01 crore new shares to existing shareholders, according to a draft Red Herring prospectus (DRHP).

The Ahmedabad-based company may consider the placement of up to 20 lakh shares ahead of the IPO. If such a placement is completed, the size of the offering will be reduced.

Currently, the promoters own 67.94% of the company, with the majority held by Cadila Pharmaceuticals (49.50%) and the remainder by IRM Trust Ltd through its managing trustee, Rajiv Indravadan Modi.

Proceeds from the offering will finance capital expenditure requirements for developing the Namakkal and Tiruchirapalli urban gas distribution network in Tamil Nadu for debt repayment and other general corporate purposes.

IRM Energy offers Piped Natural Gas (PNG) and Compressed Natural Gas (CNG). Operating in Gujarat, Punjab and Tamil Nadu, the company serves 168 industrial customers, 202 commercial customers and 43,183 domestic customers as of September 2022.

As of September 2022, it has a network of 56 CNG filling stations, 2 of which are company-owned and operated, 30 are owned and operated by distributors, and 24 are owned and operated by oil marketing companies.

The company’s operating income more than doubled to Rs 504.12 crore in the six months that ended September 30, 2022, from Rs 205.45 crore a year earlier.

The company’s after-tax profit fell 17.91% to Rs 39.25 crore in the six months from Rs 47.81 crore a year ago due to higher costs of imported gas.

HDFC Bank and BOB Capital Markets are the lead managers on the book for the offering. The company’s equity plans are to be listed on the BSE and NSE.