JG Chemicals Ltd has filed a draft red herring prospectus with the Securities and Exchange Board of India (Sebi) to raise funds via an initial public offering.

The IPO includes a new issue of Rs 202.5 crore and an offer to sell up to 5.7 million shares by existing shareholders and promoters.

The OFS includes 3.64 million shares in Vision Projects and Finvest Pvt Ltd, 140,000 shares in Jayanti Commercial Ltd, 1.27 million shares in Suresh Kumar Jhunjhunwala (HUF) and 650,000 shares in Anirudh Jhunjhunwalal (HUF).

Proceeds from the new issue will be used to invest in its materials division, BDJ Oxides. The company will use Rs 45 crore for debt repayment, Rs 5.31 crore for setting up R&D centres, Rs 65 crore for the long-term working capital needs of subsidiaries and Rs 35 crore for its own long-term working capital needs.

BDJ Oxides has total outstanding borrowings of Rs 54.65 crore as of December 2022. Centrum Capital and Emkay Global Financial Services lead book-runners on the issue. Keynote Financial Services Ltd is also one of the BRLM (Book Running Lead Manager) in JG Chemicals’ IPO.

JG Chemicals is the largest zinc oxide producer in India, and the tire industry is the largest consumer of the product. The company is also a leading supplier of paint, footwear, and cosmetics manufacturers in India.

Its total installed capacity as of 31 October 2022 is 77,040 MTPA spread across three manufacturing plants located in Jangalpur (West Bengal), Belur (West Bengal), and Naidupeta (Andhra Pradesh).

For the fiscal year 2022, the company reported revenue of Rs 612.83 crore compared to Rs 435.30 crore a year ago. Net profit for the period was Rs 43.13 crore compared to Rs 28.80 crore last year. Profit margins improved to 7.04% from 6.62% last year.