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Rossari Biotech
A speciality chemicals manufacturer

Promoted by Edward Menezes, and Sunil Chari, Rossari Biotech commenced the specialty chemicals business in 2003 as a partnership firm. Rossari Labtech subsequently became Rossari Biotech. Besides India, operations are in 17 foreign countries including Vietnam, Bangladesh and Mauritius.

The specialty chemicals manufacturer caters to the FMCG, apparel, poultry and animal feed industries. The diversified product portfolio comprises home- and personal-care and performance chemicals, textile specialty chemicals and animal health and nutrition products. There were 2,030 across three categories end May 2020. These include over 300 acrylic polymers are produced for use in soaps and detergents, paints, inks and coatings, ceramics and tiles, water treatment chemicals and pulp and paper. Institutional cleaning chemical formulations are used by hotels, facility management services, airports, companies, food service providers, commercial laundry operators, malls, multiplexes, educational sector and places of worship.

The home- and personal-care and performance product portfolio for water treatment formulations, specialty formulation for breweries as well as dairies is being expanded. New personal-care and cosmetics products are to be launched. Sales of the business constituted 46.81% of the total revenues in the financial year ended March 2020 (FY 2020).

Textile specialty chemicals find applications in the entire value-chain of the textile industry, from fiber, yarn to fabric, wet processing and garment processing. There were 1,543 products in this category end May 2020. Revenues of the segment comprised 43.71% of the total revenues in FY 2020.

Diversification into animal health and nutrition for supplying poultry feed supplements and additives, pet grooming and pet treats including for weaning, infants and adult pets has resulted in over 100 products. The foray into the pet grooming sub-category was following the acquisition of the Lozalo brand and related trademarks, intellectual property and employees in FY 2019. Sales of the division consisted of 9.48% of the total revenues in FY 2020.

Most of the products are manufactured at owned facility at Silvassa in the Union Territory of Dadra & Nagar Haveli. The installed capacity is 1.20 lakh tonnes per annum (tpa). The annual capacity utilization was 82.46% in FY 2020 from 93.94% in FY 2019 and 74.19% in FY 2018.

A manufacturing facility is coming up at Dahej in Gujarat. The installed capacity will be 1,32,500 tpa. It will enjoy proximity to the deep-water, multi-cargo port of Dahej. The state-of-the-art plant will be commissioned in the current fiscal year.

There are two government-recognized R&D facilities: one at the Silvassa facility and the other in Mumbai. These are also certified by the Global Organic Textile Standards and the American National Standards Institute

The pan-India network had over 204 distributors in India and 29 in 17 countries end May 2020. Home- and personal-care and performance products are sold to businesses. Certain end formulations are marketed directly to consumers under private label or in partnership with digital market platforms such as Amazon. International offices are in Ho Chi Minh City, Vietnam, and Dhaka, Bangladesh, the two primary overseas markets for textile specialty chemicals.

A joint venture (JV) with Buzil, a German company, offers solutions for institutional cleaning, hygiene and disinfection. The JV is called Buzil-Rossari Pvt Ltd . Through a technology license agreement, specialty chemicals for institutional cleaning, hygiene and disinfection are sold to institutional customers such as facility management services, hotels, airports, companies, malls, hospitals and educational institutions. Buzil-Rossari is responsible for the marketing and sale of the product in India and other Saarc countries.

A JV is planned to make construction chemicals, with an addressable market of US$1.1 billion, and water treatment formulations, with US$ 1.7 billion.

Strategic investments and acquisitions of businesses in the specialty chemicals industry will be the growth driver going ahead.

Impact of covid-19

Being a manufacturer of disinfectants and sanitizers as part of the home- and personal-care and performance chemicals portfolio, products are categorized as essential goods. Hence, the Silvassa facility was not shut down during the pandemic-induced lockdowns. However, due to limited availability of labour and supply chain constraints, the plant was operating at sub-optimal capacity utilization in April. Since then, operations have resumed in a phased manner, as per government directives. The plant utilization has improved, raw material suppliers have resumed operations and supply has become regular.

The Offer and the Objects

The offer comprises fresh issue of 11,82,033 equity shares at the upper price band of Rs 425 and 11,76,470 equity shares at the lower price band of Rs 423, aggregating up to Rs 50 crore, by the company and an offer for sale of up to 1,05,00,000 equity shares, aggregating to Rs 444.15 crore at the lower price of Rs 423 and Rs 446.25 crore at the upper price band of Rs 425, by the selling shareholders. Proceeds from the offer for sale will not be received by the company.

The net proceeds of the fresh Issue and the proceeds from the pre-IPO placement are proposed to be used to repay or prepay Rs 65 crore of indebtedness availed, including accrued interest, and funding working capital requirement of Rs 50 crore. The balance will be for general corporate purposes.

Pre-IPO placement of equity shares aggregated to Rs 100 crore. The size of the fresh issue of up to Rs 150 crore, as disclosed in the Draft Red Herring Prospectus, has been reduced by Rs 100 crore following the pre-IPO placement. Accordingly, after adjustment for the pre-IPO placement, the size of the fresh issue is up to Rs 50 crore.

The pre-IPO placement was of 23,52,920 shares at Rs 425 with Malabar India Fund, White Oak, Kotak Infina, Axis AMC, Mirae Asset, Sundaram Mutual Fund, IIFL and ICICI Lombard General Insurance.


The size of the global specialty chemicals market was approximately US$ 237 billion in 2018 and is expected to grow at 5.4% per annum to reach US$ 308 billion by 2023. The global market is expected to grow at CAGR of 5.6% from 2018 to US$ 167 billion in 2023. The relevant Indian specialty chemicals markets is expected to grow at CAGR of 11.6% from 2018 to US$ 13.3 billion in 2023.

The addressable Indian textile specialty chemicals market is US$ 1.2 billion. Due to increasing awareness of the ill-effects of certain chemicals on humans and the environment, the demand for environmentally sustainable green chemicals is increasing, particularly from the textile industry. The evolution of green chemistry in the chemical industry will be a critical trend fueling the growth of the environmentally sustainable green chemicals market. The global green chemicals market is expected to record a CAGR of 10.5% between 2019 and 2023.

Presence in the animal health and nutrition products is largely in the poultry and pets segments, accounting for 55% of the total market. The addressable Indian animal health and nutrition product market is US$ 0.14 billion. The poultry segment is the largest end-use industry. It is in the process of expanding its footprints in the feed additive of the aquaculture segment, the fastest growing end-use industry.

The current environment is conducive for specialty chemical companies because of the growth opportunities in India and overseas as global users seek alternative to China.

Consolidated sales registered a CAGR of 36.7% to Rs 600 crore and net profit a CAGR of 65.9% to Rs 65.25 crore between FY 2017 and FY 2020.


Due to the covid-19 pandemic, there might be a temporary reduction in demand for textiles in India and abroad. The textile segment is an important user.

Revenues from the top five customers across product categories constituted 43.95% of the total sales from operations in FY 2020. Revenues from the top 10 customers across product categories contributed 53.72% of the total sales in the year. Reliance on a limited number of customers involves several risks as any delay or cancellation of orders from even a few can have a severe impact on revenues and profitability.

There are no firm commitment long-term supply agreements with most of the customers. Orders are short term purchases.

The market is competitive. Threats are overseas peers and cheap imports from low-cost manufacturing destinations.

Exports were just 11.04% of the total sales in FY 2020, 13.92% in FY 2019 and 13.77% in FY 2018.


Consolidated sales were Rs 600.09 crore and consolidated net profit Rs 65.25 crore in FY 2020. At the higher price band of Rs 425, the offer is made at around 33.8 times the FY 2020 EPS of Rs 12.6 on a post-issue equity share capital of Rs 10.386 crore of face value of Rs 2 each. Listed industry peers are Aarti Industries, Vinati Organics, Atul, Galaxy Surfactants and Fine Organics Industries. However, Rossari is smaller than all of them.

Aarti Industries reported sales of Rs 4186 crore and profit of Rs 536 crore in FY2020. EPS was Rs 30.8. At the current market price of Rs 950, it trades at 30.9 times the FY 2020 earnings.

Vinati Organics reported sales of Rs 1029 crore and profit of Rs 334 crore in FY2020. EPS was Rs 32.5. At the current market price of Rs 1017, it trades at 31.3 times the FY 2020 earnings.

Atul reported sales of Rs 4093 crore and profit of Rs 666 crore in FY2020. EPS was Rs 224.7. At the current market price of Rs 4700, it trades at 20.9 times the FY 2020 earnings.

Galaxy Surfactants reported sales of Rs 2596 crore and profit of Rs 230 crore in FY2020. EPS was Rs 65. At the current market price of Rs 1582, it trades at 24.3 times the FY 2020 earnings.

Fine Organics Industries reported sales of Rs 1038 crore and profit of Rs 165 crore in FY2020. EPS was Rs 53.8. At the current market price of Rs 1956, it trades at 36.4 times the FY 2020 earnings.

Rossari Biotech: Issue Highlights
Offer for sale (No. of Equity shares in crore)1.05
Offer for sale
-On lower price band (in Rs crore)444.15
-On higher price band (in Rs crore)446.25
Fresh issue (in Rs crore)50
Price Band (Rs)423-425
For Fresh Issue Offer size (in no of shares )
-On lower price band 1182033
-On higher price band 1176471
Post issue capital (Rs crore)
-On lower price band (in crore)10.387
-On higher price band (in crore)10.386
Post issue Promoter shareholding
-On lower price band (%)72.68
-On higher price band (%)72.69
Bid Size (in No. of shares)35
Issue open date13-07-2020
Issue closed date15-07-2020
ListingBSE, NSE
Rating 48/100


Rossari Biotech: Consolidated Financials
Particulars1703 (12)1803 (12)1903 (12)2003 (03)
Total Income234.97292.17516.22600.09
Operating Profits23.9942.6377.63104.74
Other Income1.191.370.913.72
PBT Before EO18.71137.4763.3988.06
PBT after EO18.7137.4763.3988.06
Provision for Tax4.4312.0717.7122.59
Profit after Tax 14.2925.4045.6865.47
Share of loss of JV0.000.000.00-0.22
Net Profit14.2925.4045.6865.25
EPS (Rs)*
*EPS is on post issue equity capital of Rs 10.386 crore of face value of Rs 2 each
# EPS not annualized due to seasonality of business
Figures in Rs crore
Source: DRHP and RHP

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