Madhya Bharat Agro Products IPO Review
Madhya Bharat Agro Products is a Rajasthan based Single Super Phosphate Manufacturer. Company is planning for an IPO. They have filed a draft red hearing prospectus with the market regulator SEBI. They are going to issue 81 Lakhs equity shares at Rs 10 (face value) each. The IPO amount will be used to set up beneficiated Rock Phosphate Plant with an installed capacity of 99,000 TPA; to set up Single Super Phosphate Plant with an installed capacity to further 1,20,000 TPA; Granulated Single Super Phosphate plant with an installed capacity of 90,000 TPA; Sulphuric Acid Plant with an installed capacity of 49,500 TPA; for working capital requirement and other corporate purposes. In the 8 months ended Nov 2010, company reported a net income of Rs 2,677.52 Lakhs and a net profit of Rs 331.91 Cr.
India is a country where acute shortage of high grade Phosphate. Phosphate rock is basically used as a plant nutrient either by direct application to soil as a powered product or in the creation of Super Phosphate, Triple Super Phosphate or Diammonium Phosphate fertilizers. Both Elemental Phosphorus and Phosphoric Chemicals are derived from Phosphate Rock. They are used in insecticides, detergents, fireworks, military smoke screens, matches, and incendiary bombs. Rock Phosphate is not abundantly available in India. It is used for the production of fertilizers. To fulfill the requirement of Rock Phosphate, it is being imported by India. Country imported 5.3 Million Tons of Rock Phosphate in 2008. India’s production of Rock Phosphate in FY 2010 was 1.587 Million Tones. Import of phosphoric Acid in FY 2010 was 2.721 Million Tones. Our consumption of Phosphate fertilizers in FY 2010 was 7.274 Million Tones. Super phosphate is a compound produced by treating rock Phosphate with Sulphuric Acid or Phosphoric Acid.
Company chose SSP fertilizer as their product few years back and now they are committed for the development of Indian Agriculture Sector by the establishment of integrated Mineral Beneficiation Plant comprising SSP, BRP, GSSP and Ancillary Plant of Sulphuric Acid. Farmers prefer SSP in powder form in the states like Madhya Pradesh and Chhattisgarh. Company is aggressively trying to increase their customer base. They are trying to become a major beneficiation and fertilizer manufacturer by providing cost effective and quality products.
India is really an agriculture economy. Government is spending a lot of money for the well being and prosperous of farmers. Huge growth can be expected in the Indian agriculture sector. It is expected that the fertilizer companies will outperform in the coming years. The fundamentals of the company are strong. Company can grow as a dominant player in the fertilizer industry. The IPO price band will be available soon.