Penna Cement Files For a Second Time With SEBI For an IPO

An Overview of the Company

Popular in Southern as well as Western India, Penna Cement has filed its second draft red herring prospectus (or DRHP) with the Securities and Exchange Board of India. By doing so it hopes to launch an initial public offering (or IPO) amounting to INR 1,550 Crores.

This IPO is set to release INR 1,300 Crores in the form of fresh equity shares. The remaining INR 250 Crores is expected to be raised via an offer of sale.

Having launched in 1991, Penna Cement has over the years increased their installed capacity such that it presently stands at 10 million tons. Presently, cement is generated in four cement plants that they own, and which are located in Telangana and Andhra Pradesh.

Objectives

The proceeds of the initial public offering are aimed at generating fresh capital such that certain borrowings made on behalf of the company can be repaid. Thus far INR 550 crore have been set aside to make these repayments.

Penna Cement’s Krishnapatam (or KP) Line II project is set to benefit from INR 105 crores generated via the IPO.

INR 80 Crores will be set aside to improve Penna Cements cement mill which is also responsible for grinding raw materials.

Two waste heat recovery setups will be created, one of which will lie in Talaricheruvu and requires INR 110 crores while the other plant will be located in Tandur and will require INR 130 Crores from the IPO.

Financial Performance and Positions

Listed below are relevant features highlighting the financial performance and position of Penna Cement over the past few years.

Position – Penna Cement presently identifies itself as being one of the biggest privately owned cement companies in the country today.

Financial Performance in 2020-21 – Penna Cement generated a revenue derived from its operations to an amount of INR 2,476.4 Crores and scored an operating profit amounting to INR 479.8 Crores. The net profit generated by Penna Cement amounted to INR 152.1 Crores for this financial year.

Fast Facts – 2020 saw Penna Cements sell 4.24 million MT Cement, it partnered with over 3000 dealers and commissioned 2 grinding units along with a single packing unit.

Other Pertinent Information

Axis Capital, Edelweiss Financial Services, ICICI Securities, JM Financial and YES Securities have each been charged with being responsible for Penna Cement’s IPO under the role of investment bankers.

Penna Cement’s appointed registrar is KFin Technologies Private Limited.

Products created by Penna Cement include varied forms of cement ranging from ordinary Portland cement and Portland pozzolana cement to Portland slag cement.

With clients located across 10 states, Penna Cement’s own Engineering and Projects team can be credited with executing each of their cement and power plants.

What makes Penna Cement stand out is its commitment to adopting and innovating sustainable business practices, each operating with a focus on managing waste and energy, conserving water, encouraging afforestation and reducing emissions.

While Covid-19 has affected the output and revenue of a large chunk of companies spread across the country, Penna Cement has indicated that it was only minorly affected by the same as it saw its revenue rise from INR 2,167 Crores in FY 2020 to INR 2,476.4 Crores as mentioned above for FY 2021.

Penna Cement’s clientele ranges from small homeowners to large scale real estate developers belonging to varied state governments and global construction players.

Concluding Thoughts

Penna Cement has had a strong set of values in place including but not limited to focusing on customers, acting with integrity, pursuing excellence, caring for safety and community and nurturing employees. Each of these factors has helped contribute to its successful growth and expansion commitments thus far.