KARACHI, PAKISTAN: Ghani Global Group will sell around 50 per cent shares in its subsidiary Ghani Chemical Industries Limited (GCIL) through an initial public offering (IPO) at Pakistan Stock Exchange (PSX), to fund Rs8.5 billion ($49.7 million) expansion.
The Board of Directors of Ghani Chemical Industries Limited, one of the subsidiary companies and the largest manufacturer of medical and industrial gases in Pakistan, has decided to make an IPO at the strike price to be determined through book building process; and utilize the funds for the setting-up of two state-of-the-art chemical plants for manufacturing of Citric Acid and Sulphuric Acid in Allama lqbal Industrial City, Faisalabad, with an approximate cost of Rs8.5 billion.
The planned Citric Acid plant is envisaged to have a capacity of 60,000 tons/year and Sulphuric Acid plant will have a capacity of 70,000 tons/year.
It may be added that after the ensuing financial structuring and IPO, Ghani Global will hold more than 50 per cent equity in the listed company with an expected valuation cap of Ghani Global’s holding in Ghani Chemicals coming approximately to Rs13 billion, based on Ghani Chemicals share price for the book-building process.
Ghani Chemicals also plans to setup a coal based power plants to meet the energy requirements of its plants.
Demand of medical gases in health sector has significantly escalated during third wave of Covid-19 and is expected to sustain in short to medium term. On the other side manufacturing and construction industry has comprehended recovery which led to improved demand for industrial gases.
The company was able to capitalize growth from underutilized free capacity, which was available as a result of 3rd 110 TPD plant expansion, price rationalization of medical and industrial gases also witnessed from financial performance of the company recorded in 9MFY21.
Company’s margins, coverages and working capital cycle showed improvement at all levels. Cash flows of the Company also posted a healthy growth. All three plants are operational with higher capacity utilization.
Capacity expansions are underway and currently the company is setting up its fourth 105 TPD dedicated plant which will cater the need of a renowned big industrial customer through a long term sale contract and would play a vital role towards top-line and bottom line growth. Ghani Chemicals also intends to setup the largest 275 TPD plant in KPK in future as well.
Going forward the company is expected to receive benefits from rising demand from industrial and medical gases which will be translated into better financial performance and are evident in future financial projections; capacity expansions with new plants and enhancement of current ratio of utilization to ensure maximum production; reduce reliance towards borrowings from financial institutions.