Asian Granito's Rs 441 crore Rights Issue to open on April 25: Find key highlights

Asian Granito India Limited (AGL), one of the largest Luxury Surfaces and Bathware Solutions brands in the country is scheduled to open its Rs 441 crores Rights Issue on April 25, 2022. Shares under the Issue are offered at a price of Rs 63 per Share i.e. 46.6% discount to the closing share price of Rs. 118 per share on April 06, 2022, on NSE. The Issue will close on May 10, 2022.

The Company will issue approximately 7 crores fully paid-up Equity Shares of the face value of Rs 10 each for cash at a price of Rs 63 per Equity Share (including a premium of Rs 53 per Equity Share) aggregating Rs 441 crore on a rights basis to eligible equity shareholders in the ratio of 37:30 (37 Equity Shares for every 30 Equity shares fully paid-up Equity Share held by the Eligible Equity Shareholders). The company has fixed April 12, 2022, as the record date for the purpose of determining equity shareholders entitled to receive the rights entitlement in the rights issue.

Rights issue proceeds will be utilised to fund its Mega Expansion Plans, set up three new state-of-the-art manufacturing facilities at Morbi, Gujarat in Value Added Luxury Surfaces & Bathware Segments including GVT Tiles, Sanitaryware and SPC Flooring, setting up one of India's largest Display Centre, funding the working capital requirements of the above new projects and general corporate purposes.

The Promoter & Promoter Group shareholders have confirmed their participation of up to 28.99% shareholding (i.e. upto 100% of their current shareholding) amounting to Rs 128 crores. Promoter and Promoter Group shareholders have also indicated that in case the Issue is undersubscribed, they reserve the right to subscribe to part or the whole amount of the unsubscribed portion, subject to applicable laws. Post completion of the Issue, the total outstanding shares of the Company would increase to 12,67,51,634 equity shares from 5,67,51,634 equity shares as of March 31, 2022. Pantomath Capital Advisors Pvt. Ltd. is the sole lead manager for the rights issue.

Mr. Kamlesh Patel, Chairman and Managing Director, Asian Granito India Ltd said, "AGL has lined up major expansion plans in Morbi region in the state of Gujarat, keeping in mind strategic locational advantages, proximity to the raw material sources, easy & quick availability of manpower, proximity to some of the country's largest ports, among others. With the commercialisation of the proposed plans, AGL is expected to strengthen its position as an Integrated Luxury Surfaces and Bathware Solutions Brand and up the Group's margin profile in near to medium term."

Morbi is India's hub for Ceramic Tiles & Sanitaryware and accounts for more than 80% of the country's total production, housing over 1,100 manufacturing units.

New entities incorporated for Expansion:-

· Future Ceramic Pvt Ltd - FCPL (wholly owned subsidiary of AGL) to manufacture Value Added Large Format Glazed Vitrified Tiles (GVT) in 1200x1200 mm, 1200x1800 mm, 1200x2400 mm, 800x1600 mm and 800x2400 mm formats. To capture the vast opportunities in the GVT space, FCPL is setting up a new manufacturing facility at Morbi, Gujarat with an installed capacity of 5.94 million sq. mtrs. per annum. The total estimated cost for setting up the new manufacturing unit in FCPL is around Rs 174 crore.

· AGL Sanitaryware Pvt Ltd - ASWPL (a wholly-owned subsidiary of AGL) plans to establish an in-house manufacturing unit for Sanitaryware products. Currently, AGL deals in a range of Sanitaryware products, manufactured through third party manufacturers and imported from outside India, and are marketed under AGL Brand. To strengthen and scale up the Sanitaryware segment, the Group is setting up a manufacturing facility at Morbi, with an installed capacity of 0.66 million pieces per annum. The estimated cost for setting up the proposed new unit is around Rs 46 crore.

· AGL Surfaces Pvt Ltd - ASFPL (a wholly-owned subsidiary of AGL) to manufacture innovative new age Stone Plastic Composite (SPC) flooring. ASFPL is incorporated as part of the Company's strategy to expand its product portfolio and presence in high growth-oriented export markets through value-added offerings. The manufacturing facility is proposed to be set up at Morbi with an installed capacity of 2.97 million sq. mtrs. of flooring per annum. The total estimated cost for setting up the new manufacturing unit in ASFPL is around Rs 33 crores.

The Company has estimated that the total working capital requirement for all the New Projects in the first year of commercial operations in 2023-24 will be around Rs 80 crore, for which the company is planning to utilise around Rs 37 crore out of Rights Issue Proceeds.

The Company is also setting up one of the World's largest display centres at India's Ceramic Tiles hub - Morbi, Gujarat to showcase AGL Group's entire product range under a single roof i.e. Tiles, Sanitaryware, Bathware, Quartz & Engineered Marble, SPC, etc. The five-storey display centre is conceptualised in 1.5 lakh square feet of area and aims to showcase AGL Group's production, technological excellence and best in class sourcing calibre in a single place and is also expected to enhance Company's brand and reach. The total estimated cost for setting up the Display Centre is around Rs 40 crore.

The Net Proceeds of the Rights Issue shall be used for the Proposed Projects. Additionally, the Company also proposes to deploy the proceeds of the Rights Issue to meet general corporate purposes including other strategic initiatives, debt reduction in the group, brand building and strengthening, marketing activities, and ongoing general corporate exigencies.

In October 2021, the Company successfully completed a Rights Issue of Rs 224.64 crores. Post this, the Company has become net debt-free on a standalone basis. The issue was oversubscribed by 1.15 times (Issue Size: Rs 224.64 crore; Bids Received: Rs 258.77 crore).