Course Code: FINM687 Course Title: Corporate treasury and investor relation

Course Instructor: Sushant Gupta

Academic Task No.: 1 Academic Task Title: IPO

Date of Allotment:29/11/2022 Date of submission: 12/12/2022

Student’s Roll no:RQ1E22A24 Student’s Reg. no:12104265

Evaluation Parameters: As per rubrics

Learning Outcomes: pre and post IPO working

Declaration:

I declare that this Assignment is a solo work. We have not copied it from any other
student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.

Student’s Signature: Jatin yadav

Evaluator’scomments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

Evaluator’s Signature and Date:

Marks Obtained: Max. Marks……
Table of Contents
Paradeep Phosphates Limited......................................................................................................................3
IPO of Paradeep phosphate..........................................................................................................................3
Objective of IPO......................................................................................................................................4
Business Model of Paradeep Phosphate.......................................................................................................6
1. Sourcing and Backward Integration :...............................................................................................6
2. Quality Control -..............................................................................................................................6
3. Research & Development :..............................................................................................................7
4. Production Process...........................................................................................................................7
5. Sales & Marketing :.........................................................................................................................7
6. Farmers :..........................................................................................................................................7
Peer comparison..........................................................................................................................................8
SWOT Analysis :.........................................................................................................................................9
Strength:..................................................................................................................................................9
Weakness :...............................................................................................................................................9
Opportunity :...........................................................................................................................................9
Threats :.................................................................................................................................................10
Financial Metrics :.....................................................................................................................................10
Market Condition of Paradeep phosphate :................................................................................................11

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 Paradeep Phosphates Limited

India's Paradeep Phosphates Limited was established in 1981 and produces fertilisers without
urea. The firm manufactures, trades, distributes, and sells a range of complex fertilisers,
including DAP, NPK-10, NPK-12, and NP-20 grades of nitrogen, phosphorus, and potassium,
zypmite, phospho-gypsum, and hydroflorosilicic acid.

In terms of total sales for the nine months ending December 31, 2021, Paradeep Phosphates
Limited is the second-largest private sector producer of non-urea fertilisers and Di-Ammonium
Phosphate (DAP). The firm sells fertilisers under the trade names Navratna and Jai Kisaan-
Navratna.

Sulphuric acid, phosphoric acid, and DAP production facilities are all part of Paradeep
Phosphates Limited's manufacturing complex, which is situated in Paradeep, Odisha. The plant
has storage capacity for up to 120,000 MT of phosphate rock, 65,000 MT of phosphoric acid,
55,000 MT of Sulphur, and 35,000 MT of MOP, respectively.

The business created a vast network of sales and distribution with a significant presence in
eastern India. As of March 31, 2022, Paradeep Phosphates distributed its goods to 14 Indian
states using a network of 468 stock locations and 11 regional marketing offices.

As of March 31, 2022, the firm was serving more than five million farmers in India through a
network of 4,761 dealers and more than 67,150 merchants.

IPO of Paradeep phosphate

The goal of Paradeep Phosphates' first public offering is to raise 1501.73 crores (IPO). The initial
public offering (IPO) will begin on May 17 and end on May 19, 2022. On May 13, 2022,
proposals for anchor investors will be accepted. The share price ranges from 39 to 42 dollars.

The offering consists of an offer for sale by the company's promoters and shareholders as well as
a new issuance of equity shares valued at 1255 crores. The holding company for Zuari Maroc
Phosphates Private Limited (ZMPPL) will sell 60.18 lakh equity shares, and the Government of
India will sell its full shareholding in the business and stop being a promoter.

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 IPO Date May 17, 2022 to May 19, 2022
Listing Date Friday, May 27, 2022
Face Value ₹10 per share
Price ₹39 to ₹42 per share
Lot Size 350 Shares
Issue Size 357,555,112 shares of ₹10
(aggregating up to ₹1,501.73 Cr)
Fresh Issue 239,047,619 shares of ₹10
(aggregating up to ₹1,004.00 Cr)
Offer for Sale 118,507,493 shares of ₹10
(aggregating up to ₹497.73 Cr)
Issue Type Book Built Issue IPO
Listing At BSE, NSE
QIB Shares Not more than 50% of the Net Offer
Offered
NII (HNI) Not less than 15% of the Net Offer
Shares
Offered
Retail Shares Not less than 35% of the Net Offer
Offered
Company Zuari Maroc Phosphates Private Limited, Zuari Agro Chemicals
Promoters Limited, OCP S.A and President of India, acting through the Ministry
of Chemicals and Fertilizers, Government of India are the company
promoters.

Objective of IPO
It is suggested that the Fresh Issue's net proceeds be used as follows:

 Finding a portion of the purchase of the Goa Facility

 Prepayment or payback of some of our debt.
 Broader corporate objectives

PPL's current paid-up equity capital, now at Rs. 575.45 crore would increase to Rs. 814.50 crore
following the IPO. The firm is aiming for a market valuation of Rs. 3420.89 cr. at the upper
maximum of the IPO price.

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Price movement of share of Paradeep phosphate :-

When company launch its IPO, it is listed in market at price of 43 Per share and currently its
moving at a price of 58 per share. It shows a growth of 34.8% during these 7 months.

We can see the reason of change in price throughout these months with the help of quarterly
profits as given below :-

Quarters Sep Jun Mar Jun

22 22 22 21

Net Profit/(Loss) For the Period 50.74 62.65 35.66 59.50

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 Business Model of Paradeep Phosphate
The company has adopted an integrated business model that includes backward
integration of raw materials, R&D, a diverse product portfolio, strategic location of
the manufacturing facilities for logistical advantage, and strong ties with the
channel partners and farming community in order to improve control of the value
chain.

Following points can describe a business model of Paradeep phosphate :-

 Sourcing and Backward Integration

 Quality Control
 Research & Development
 Sales & Marketing
 Farmers

1. Sourcing and Backward Integration :- PPL enjoys a good rapport with its
suppliers. PPL purchases raw materials from a variety of countries, including
Saudi Arabia, Qatar, Morocco, Jordan, and Jordan. Phosphate rock, ammonia,
phosphoric acid, sulphur, and muriate of potash are the main raw ingredients.
The business and its suppliers have long-term supply agreements in place to
guarantee a steady supply. By creating phosphoric acid and sulfuric acid, the
company's other two most valuable core raw materials, it has a backward
integrated production process. In our production facilities, we make sulfuric and
phosphoric acids. We produced 37.35 percent, 43.11%, and 40.1 percent,
respectively, of our total raw material requirements from our plant in FY22,
FY21, and FY20.

2. Quality Control - PPL places a high priority on quality control and product
safety at every stage of the manufacturing process, from the acquisition of
raw materials through the packaging and delivery of the final product. We
make sure that the calibre of our goods satisfies consumer expectations and
maximises client happiness. At our "Quality Control Laboratory," the raw
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 materials and completed goods go through a thorough testing procedure. The
QC lab is furnished with cutting-edge machinery. We send samples to NABL
recognised and national laboratories in addition to our own testing in order to
double-check the quality standards.

3. Research & Development :- In Paradeep, Odisha, we have a research and

development facility. Our research and development team at our
manufacturing site, under our quality control laboratory, has 31 people as of
March 31, 2022. With effect from September 25, 2014, it is recognized by the
Department of Scientific and Industrial Research, Government of India, and
the certificate has been extended through March 31, 2023.

4. Production Process :- The firm has three Sulphuric acid manufacturing

facilities, three captive power plants, a sizable phosphoric acid production
facility, and four trains for the production of DAP and NPK, all of which are
situated in Paradeep, Odisha. To make DAP and NPK, phosphoric and sulfuric
acids are required. As of March 31, 2022, the total annual installed capacity of
the Sulphuric Acid and Phosphoric Acid production plants was about 1.30
million MT, and the total annual granulation capacity of the DAP and NPK
production facilities was approximately 1.50 million MT, respectively. Three
operable concentrators at the factory are also used to concentrate weak
phosphoric acid into strong phosphoric acid.

5. Sales & Marketing :- The company's goods are distributed throughout the
sixteen states through a solid sales and marketing network made up of
regional marketing offices and more than 600 stock locations. More than
72,925 stores and 5,322 dealers make up the network, which serves more than
8 million farmers in India.

6. Farmers :- Over 8 million farmers are PPL's final customers. In order to

provide farmers with free education on comprehensive agronomic solutions
and
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 increase the contributions of the agricultural sector, the company, through its
mission of "Serving Farmers Saving Farming," trains farmers to increase their
level of income through various income-generating schemes. Additionally, our
business educates farmers on cutting-edge crop management techniques. In 16
states, we have a team of 100 devoted field workers.

Peer comparison
Company Price Profit ROE EBITDA ROA
Paradeep 57.35 397 17.87% 358.38 5.01
phosphate
Coromandel int 959.65 1524 24.03% 1683.96 12.59
Tata Chemical 1038 1174 13.34% 745.92 4.71
Chambal Fert 306.25 1259 9.79% 1546.24 9.89

These are some peers of Paradeep phosphate like coromandel int., tata chemicals,
Chambal fert, Fert and chem

Paradeep phosphate is holding second largest market in India.

The company is also earning moderate Return on asset then compared to peer it is
little less as all other are from long time in market. So, seeing the time period it is
performing well.

Also seeing return of equity is having a equivalent share of the market. Earning a
good and constants but a slow growth.

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 SWOT Analysis :-
Strength:-
 Utilizing shareholders' funds wisely - return on equity (ROE) has increased
during the past two years
 Company is generating net cash and has improved net cash flow over
the past two years.
 Annual Net Profits have increased over the past two years.
 Organization with the Zero Promoter Pledge

Weakness :-
 Second Support for Negative Breakdown (LTP S2)
 86.4% returns for the Nifty 500 over 4.5 years for stocks with a medium
to low Trendlyne Momentum Score are considered bearish.
 The latest quarter saw MFs reduce their shareholdings after 190%
returns for more than 6.4 years.
 Using capital inefficiently to make profits - RoCE has decreased over the
previous two years -9.0% returns for the Nifty 500 during the same period
 Falling profit margin and declining net profit (QoQ)
 Low Piotroski Score: Financially precarious companies

Opportunity :-
 Unused land owned by the business is available for future growth.
 The goal of Paradeep Phosphates Limited is to increase its production
capacity by 1.2 million MT after opening a new manufacturing facility
in Goa.

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Threats :-
 The business's operations are influenced by the weather. Due to the cyclical
structure of the seasons, bad weather immediately affects business
earnings.
 Government rules are followed by Paradeep Phosphates. Therefore, any
change in policy might have a direct effect on how this firm operates
and how much money it makes.

Financial Metrics :-
Values
Inventory Turnover ratio 3.29
Profit margin 5.06%
ROE 17.87%
ROA 5.01%
EBITDA 358.38

Paradeep phosphate having good earnings before interest, tax, depreciation, and
Amortisation. Also, it has sufficient profit margin to survive in the market. The
inventory turnover ratio is also good from the company’s point of view. Lesser
time ratio less transportation and other cost will be incurred and neither there is
cost of storing inventory. Inventory is maintained at proper level .

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 Market Condition of Paradeep phosphate :-
Prior to Paradeep Phosphates' entry on the BSE and NSE stock exchanges,
their shares were trading at a premium in the grey market, an unregulated
market for unlisted assets.

"Due to the ongoing sell-off in the larger market, market players gave Paradeep
Phosphates a lacklustre response. In contrast to its competitors, Paradeep
Phosphates was priced reasonably. According to market circumstances,
Paradeep Phosphates will likely list at a price similar to its issue price." Co-
Founder of Unlisted Arena, a website that follows grey markets and transacts in
unlisted stocks, Abhay Doshi.

Bidding was available for the inaugural share sale, which combined a new issue
with an offer for sale (OFS), from May 17 to May 19.

Shares of Paradeep might be purchased for bids between Rs. 39 and Rs. 42 each
in multiples of 350. One lot is priced at Rs 14,700 at the top of the range.

The listing of Paradeep Phosphates takes place in the midst of violent swings on
Dalal Street, where benchmark indexes have fallen more than 13% from their
high due to persistent withdrawals of foreign funds.

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