Penna Cement IPO Detail Information

Penna Cement IPO

Penna Cement IPO: Penna Cement was founded in 1991. Penna Cement is one of the largest privately-owned cement firms in India and a major integrated player in the cement industry in the production capacity at the time on March 31, 2021, with strong brand recognition in the western and southern states of India. With more than 25 years of operation, Company has been able to build their brand using strategically placed in-house manufacturing facilities, and an extensive distribution network to effectively expand their business in the west and east India markets, as and Sri Lanka, and the company plan to expand further into central, north and the other east India markets by implementing a phased expansion strategy.

Names of Promoters:

  • P. Prathap Reddy
  • Pioneer Builders
  • P R Cement Holdiings Limited

Penna Cement Company Financials:

The following table will provide a Summary of consolidated financial information.

ParticularsAs of and for the Fiscal ended (in ₹ million)
March 31, 2021March 31, 2020 March 31, 2019
Total Assets 37,744.2937,522.2737,218.40
Total Liabilities8,411.677,229.877,335.79
Total Revenue 24,763.9921,676.1421,561.81
Profit After Tax 1,520.73230.24851.33
Total borrowings 13,519.4614,703.2215,526.08

Penna Cement IPO Details:

IPO Opening DateTo Be Announced
IPO Closing Date To Be Announced
Issue Size aggregating up to ₹1,550 Cr
Fresh Issueaggregating up to ₹1,300 Cr
Offer for Sale aggregating up to ₹ 250 Cr
Issue Type Book Built Issue IPO
Face Value ₹ 10 per equity share
Price Band₹. to ₹. per equity share
Market Lot NA
Min Order Quantity NA
Listing at ExchangesBSE & NSE

Objects of the Issue:

  • Repayment/ pre-payment, in full or part, of certain borrowings availed by our Company
  • Funding of capital expenditure requirements of our Company towards our Krishnapatnam line II (“KP Line II”) project
  • Funding of the capital expenditure requirements of our Company towards upgrading the raw grinding and cement mill at Talaricheruvu
  • Funding of capital expenditure requirements of our Company towards setting up the Tandur WHR Plant
  • Funding of capital expenditure requirements of our Company towards setting up the Talaricheruvu WHR Plant
  • General corporate purposes

Penna Cement IPO Time Table:

IPO Open Date To Be Announced
IPO Close Date To Be Announced
Basis of Allotment Date To Be Announced
Initiation of Refunds To Be Announced
Credit of Shares to Demat Account To Be Announced
IPO Listing Date To Be Announced

Penna Cement IPO Lot Size:

The market lot size is _ shares. A retail-individual investor can apply for up to _ lots (_ shares or ₹_).

 LotsSharesAmount (Cut-off)
MinimumNANANA
MaximumNANANA

Penna Cement IPO Subscription status:

CategoryShares Offered Percentage (%)Subscription (times)
Qualified Institutional Buyers (QIB)
--NA
Non Institutional Investors (NII)
--NA
Retail Individual Investors (RII)
--NA
Employee --NA
Total --NA

Penna Cement business:

  • Penna Cement is one of the largest privately-owned cement firms in India and a major integrated player in the cement industry in terms of production capacity at the time of March 31, 2021, with a strong recall of its brand in the western and southern States of India. (Source: CRISIL Report) Incorporated in 1991, and with more than 25 years of operation and growth, the company has successfully leveraged its brand, strategically placed well-integrated manufacturing facilities, and a vast distribution network to effectively grow the operations in the east and west India markets, as and Sri Lanka, and company plans to expand further into the central and north of India as well as additional east India markets with a gradual expansion strategy.
  • Penna Cement has four integrated manufacturing facilities as well as two grinding units distributed throughout the States of Andhra Pradesh, Telangana, and Maharashtra, and Telangana, which have the capacity of aggregate cement production of 10.00 million tonnes per year (“MMTPA”) at the 31st of March, 2021 and the company has been in an effort of growing capacities to 16.50 MMTPA. It is anticipated to become operational at the end of Fiscal 2024. The company is also in an effort to increase their overall production of clinker from 7.80 MMTPA on 30 March 2021 up to 10.80 MMTPA.
  • It is anticipated to begin operation by fiscal 2024. At the time as of March 31, 2021, the company’s production capacity for cement and clinker comprised 5.5 percent and 6.3 percent, respectively. in the overall cement capacity and production capacity of clinker and clinker production capacity, respectively in south India which includes Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Andaman, and the Nicobar Islands, and Pondicherry (Source: CRISIL Report). The company’s integrated manufacturing facilities as well as grinding units are strategically placed in the region and have rail, road, and sea access to a range of market locations in the eastern, southern, and west regions of India and Sri Lanka.
  • Penna Cement has strategically focused on the development of a port-based logistics infrastructure to ensure reliable, efficient, and efficient distribution. The company has built one of the biggest port-based cement facilities in India located in Krishnapatnam (Source: CRISIL Report) which includes an automated ship loading facility along with packing terminals located at the Cochin, Gopalpur, and Karaikal ports. The company also bought Singha Cement (Private) Limited which is a Sri Lankan cement company, in May of 2019. They operate an industrial packing facility in Colombo, Sri Lanka, and are in the process of setting up the port-based packing terminal in Kolkata.
  • In order to strengthen their distribution plan based on port, the company purchased an auto-discharging cement vessel that has a maximum capacity of 25,500 tonnes. the company believes that the strategic position of its diverse facilities such as packing terminals, packaging facilities as well as their port-based logistics infrastructure give them many competitive advantages, which include (i) offering strategic access to west, south, and eastern India; (ii) enabling the company to effectively market their products in east, south, and west India and beyond, such as Kolkata, Bhubaneswar, Cuttack, Cochin, Pune, and Ahmednagar as well as (iii) exporting cement from Sri Lanka and export of cement to Bangladesh. Port-based logistics infrastructure helps them manage costs efficiently in the transport of their clinker and cement products to new markets, as in addition to the purchase of imported coal via the ports.
  • The company also distributed 10.69 percent, 7.18%, and 8.26 percent of its cement products by railroad, 84.36%, 80.62 percent, and 78.81 percent in their products made of cement by roads, and 4.95 percent, 12.22%, and 12.93 percent of the company’s cement products shipped by sea in fiscal years 2019, 2020 and 2021.
  • Penna Cement has established stable and cost-effective raw materials such as limestone, gypsum, and fly ash as well being coal for their factories integrated. Limestone is extracted from the limestone mines that they have captive that the company has signed lengthy mining leases. At the time as of the 31st of March, 2021 their captive limestone mines contained a total of 490.04 million tonnes of limestone. The company maximizes its coal purchases by sourcing pet coke and coal from international markets, and coal via coal links through The Singareni Colliery Company Limited (“SCCL”) located in the state of Telangana.
  • The company’s integrated manufacturing facilities are located in near proximity to limestone mines that are captive. The company’s facilities are located in Boyareddypalli, Ganeshpahad, and Tandur, and grinding units in Patas in Patas and Krishnapatnam have railway sidings that are specifically designed for them that allow the transportation of coal, laterite, gypsum, clinker cement, slag, and other materials depending on the requirements. The company has developed efficient manufacturing processes and logistic management by designating split-grinding processes for its diverse locations.

Strength:

  • A leading market player in South India with strong brand recognition and an extensive distribution network
  • Strategically placed packaging terminals and integrated facilities for manufacturing that give access to east, west, and south India markets
  • Access to top material and coke
  • is well-positioned to profit from the growing demand in the Cement industry
  • A proven track record of financial and operational performance
  • Proficient marketing and management team with a proven track record of project execution and prompt completion

Risk factors:

  • Penna Cement is dependent on the price and ongoing supply of coal and other raw materials, their costs and availability of which may be subject to significant fluctuations because of factors beyond their control.
  • Company’s capacity expansion plans for their facilities are at risk of delays that are not anticipated and cost overruns
  • Penna Cement have incurred substantial debt and the inability to meet repayment or other clauses in the financing agreements of their company could negatively impact their business, their financial health, cash flow, and credit ratings
  • Penna Cement operates in an extremely competitive market that can have a negative effect on the business of the company, performance, and financial health as well as future prospects.
  • It is capital-intensive The company might need to raise additional funds in the near future to fund the company’s growth plans. If they fail to secure additional funds could have negative effects on their business, the results of operations, financial status, and cash flow.
  • Penna Cement business is dependent on the ability of the business to minor procure enough limestone for their activities. If the company fails to obtain or mine enough limestone, or if rights are expired, if significant restrictions on the use of these rights are placed or the company is forced to pay substantially higher royalties which could have negative consequences for the company’s financial position, business, and performance.
  • Penna Cement intends to utilize some of the Net Proceeds in financing the company’s capital expenditure needs. The company has yet to place orders for capital expenditure needs.
  • Penna Cement has limited experience in port-based logistics, which is susceptible to the possibility of storms and accidents on the high seas, which can negatively impact the company’s operations
  • Penna Cement has certain contingent liabilities that haven’t been included in the company’s financial statements that if they become real they could negatively impact their financial position.
  • Penna Cement will continue to depend on the company’s distribution network to ensure the sale and distribution of its goods. Any interruption in the company’s distribution system, such as interruptions in transportation and supply of finished goods and inputs can negatively impact the company’s business and its results in the operations.
  • Penna Cement has and could continue to enter into related third-party transactions in the near future in the normal conduct of business on an arms-length basis.
  • Penna Cement’s existing operations and revenues are located in India’s southern regions. India and the inability of maintaining and growing the business in the area or to diversify its business could negatively impact its financial position, the business of the company, and results of operations. cash flow and business perspectives
  • A failure to efficiently control the expansion and growth of a company could have a significant negative impact on its future business future prospects and economic performance.
  • Insufficient utilization of manufacturing capabilities and the inability to make the most of companies’ expanded manufacturing capabilities can have a negative impact on their business future outlook and results in financials.
  • Penna Cement is in the expansion of its operations and setting up facilities in areas where the company does not have a substantial presence and previous experiences. Failure to expand into these new areas could negatively impact their performance, financial situation, and the results of their operations.
  • Penna Cement depends on limited suppliers of basic materials like coal and pet coke. If one or more of these suppliers could negatively impact the company’s operations, its results from operations, financial performance, and cash flow.
  • Failure to comply with or changes in safety, health, and environmental laws, as well as other applicable regulations for manufacturing facilities of companies, could negatively affect their operations, business results of operations, and their financial performance.
  • Indian cement business is cyclical and subject to a variety of external factors that are beyond the control of the company and could impact their business as well as performance adversely. Further, the company’s performance and operations are affected by seasonal fluctuations in the demand for cement that could adversely impact the results due to changes in revenue.
  • Penna Cement is reliant on the demand for cement coming from diverse industries, including construction, housing commercial real estate. Any decline in the industries that consume cement could have a negative effect on their growth, business, and performance.

Company’s Strategies

  • Establishing new facilities to establish a presence in central and north India
  • The focus is on port-based logistical infrastructure as well as distribution for consolidation of existing presence in the south of India and extend presence in the west and east India and continue to increase exports
  • Enhance the sales of cement blended
  • Increase efficiency of operations and continue to take steps to reduce costs.
  • Enhance the capacity of the company’s sales and distribution capabilities, and concentrate on expanding the brand name ‘Penna’

Penna Cement Board of Directors:

NameDesignation
P. Prathap ReddyChairman and Managing Director
Lakshmi Kantham Dabbara
Whole-time Director
P. Deepthi ReddyNon-Executive Director
P. Venugopal ReddyNon-Executive Director
Anil Kumar KNon-Executive Independent Director
Kancherla RavindranathNon-Executive Independent Director
P. Pradeep KumarNon-Executive Independent Director
Sairam MocherlaNon-Executive Independent Director
Umanath VarahabhotlaNon-Executive Independent Director

Penna Cement IPO Prospectus:

Penna Cement IPO Registrar:

KFin Technologies Private Limited
Selenium, Tower B
Plot No – 31 and 32, Financial District, Nanakramguda
Serilingampally, Hyderabad 500 032
Rangareddi, Telangana, India
Tel: +91 40 6716 2222
E-mail: pennacement.ipo@kfintech.com
Investor grievance e-mail: einward.ris@kfintech.com
Website: www.kfintech.com
Contact person: M Murali Krishna
SEBI registration no: INR000000221

Penna Cement IPO Lead Managers:

  • Edelweiss Financial Services Limited
  • Axis Capital Limited
  • ICICI Securities Limited
  • JM Financial Limited
  • YES Securities (India) Limited

Registered and Corporate Office:

H.No. 8-2-268/A/1/S & S1, Plot No. 705, Road No. 3, Banjara Hills, Hyderabad 500 034, Telangana, India
Contact Person: Raj Kumar Singh, Company Secretary, and Compliance Officer; Tel: +91 40 4456 5100
E-mail: cs@pennacement.com;
Website: www.pennacement.com
Corporate Identification Number: U26942TG1991PLC013359