Godavari Biorefineries To Use IPO Proceeds To Repay Rs 240-Crore Debt
Godavari Biorefineries' CFO Naresh Khetan said that the company had an overall debt outstanding of Rs 652 crore by the end of the financial year 2023–24.
(Photo source: Company website)
IPO-bound Godavari Biorefineries Ltd. aims to utilise the funds raised through the public offer to clear existing debts and to expand operations, according to its Chairman and Managing Director Samir Somaiya.
“The aim is to retire the debt of the company and the free cash flow thus generated will be used to invest into bio-based speciality chemicals later on,” he told NDTV Profit.
Meanwhile, the company’s Chief Financial Officer Naresh Khetan said that the company had an overall debt outstanding of Rs 652 crore by the end of the financial year 2023–24.
“As of March 2024, we had a debt of Rs 652 crore. Post the IPO, we will be repaying Rs 240 crore of term loans,” he said.
According to Khetan, the company will have a free cash flow of Rs 55–60 crore per year after clearing the debts.
“If the debt of Rs 240 crore is payable over a period of five years, every year we will get a free cash flow of around Rs 50 crore as principal and about Rs 5 crore to Rs 6 crore interest amount,” he elaborated.
In FY24, Godavari Biorefineries' revenue from operations had declined 16.3% to Rs 1,686.66 crore compared to fiscal 2023 when it stood at Rs 2,014.69 crore. Its Ebitda had contracted 8.6% to Rs 133.53 crore in FY24 as against Rs 146.16 crore in FY23.
On the fall in revenues in fiscal 2024, Khetan attributed it to the company's B-heavy molasses stock being low and it could not process it during the off-season period.
“Since it (B-heavy molasses stock) was not available, the distillery for ethanol had minimal profit and Ebitda as compared to the previous year. In FY24, we produced more sugar and less ethanol because government anticipation of less sugar stock has led us to produce less ethanol and more sugar,” he said.
Somaiya added that the company had expanded its capacity to process cane and convert juice to ethanol last year.
“The drought of 2023 resulted in estimates of sugarcane production in Maharashtra and Karnataka for which the ethanol blending programme was suspended. As a result of this we had a difficult number,” he said.
The Rs 554.75-crore initial public offering of the ethanol-based chemicals producer will open for subscription on Oct. 23. The three-day bidding window will close on Oct. 25.
The mainboard issue is a combination of a fresh issue of 92 lakh shares worth Rs 325 crore, as well as an offer-for-sale of 65 lakh shares worth Rs 229.75 crore.
The price band of the Godavari Biorefineries IPO has been fixed between Rs 334 and Rs 352 per share. The shares are scheduled to be listed on the NSE and BSE on Oct. 30.
