Advanced Enzyme Technologies Ltd

Issue Summary
Type
Public Issue
Size
Rs 4.05 bn to 4.11 bn
Offer Price
Rs 880 to Rs 896 per share
Minimum subscription
Minimum- 16 shares and in multiples
thereafter
Listing
BSE and NSE
Bid/Issue opens
20-July-2016
Bid/Issue closes
22-July-2016
Shares on offer
4 m + 0.5 m (Offer for sale + Fresh issue)
Face Value
Rs 10 per share
Pre/Post-issue promoter holding
80.54% / 66.5%
Promoters
Mr Vasant Laxminarayan Rathi and Mr
Chandrakant Laximinarayan Rathi
Lead Managers
ICICI Securities and Axis Capital

Objects of the fresh issue

The proceeds from offer for sale will go to the respective promoter and
shareholders selling their shares. Existing shareholders and promoters will pare
some part of their stakes through the IPO. The company will not receive any
proceeds of the offer. The amount raised through Fresh issue of Rs 500 m will be
used for the repayment of certain loans availed by Advanced Enzymes USA and
general corporate purposes.

Advanced Enzyme Technologies Ltd- IPO

20th July, 2016

Company background
1.

Business

Advanced Enzyme Technologies Ltd (AET), is India's largest Enzyme company

with presence across the value chain. The company is engaged in the research
and development, manufacturing and marketing of 400+ proprietary products
developed from 60 indigenous enzymes. Enzymes are produced and harvested
from living organisms such as plants, animals, bacteria and fungi. They are
natural protein molecules produced by all living organisms, functioning as
highly specialized catalysts for accelerating the pace of chemical reactions, that is,
they help a chemical reaction take place quickly and efficiently, without
undergoing change themselves. Enzymes are responsible for many essential
biochemical reactions and metabolic processes in microorganisms, plants,
animals, and human beings, but are not alive.
Advanced Enzyme operate in two primary business verticals namely Healthcare
& Nutrition (human and animal) and Bio-Processing (food and non-food).
2.

Key management personnel

Mr. Chandrakant Laxminarayan Rathi, aged 61 years, is the Promoter and

Managing Director of the company. He holds a Bachelor's degree in Science
(Chemical Engineering) from National Institute of Technology, Rourkela. He has
over 37 years of experience in the enzyme industry and was one of the
co-founders of Rathi Papains Private Limited incorporated in the year 1978. This
company was engaged in the business of manufacturing enzymes from papain.
He is currently responsible for the management of the entire operations of the
company and its Indian subsidiaries, including strategic initiatives of businesses.
Mr. Vasant Laxminarayan Rathi, aged 67 years, is the Promoter and a
Non-executive and Non-Independent Director of the company. He holds a
Bachelor's degree in Pharmacy from Nagpur University and degree of Master of
Science from University of Hawaii. He has over 37 years of experience in the
enzyme industry and was one of the co-founders of Rathi Papains Private
Limited incorporated in the year 1978, which was engaged in the business of
manufacturing of enzymes from papain. He promoted and incorporated
Cal-India in the year 1985 and has been associated with the company since the
Advanced Enzyme Technologies Ltd- IPO

20th July, 2016

year 1993. Mr. Vasant Laxminarayan Rathi heads international subsidiaries based
in the United States.
Mr. Piyush Rathi, aged 35 years, is Chief Marketing Officer. He holds a
Bachelor's degree in Science from University of Mumbai, Bachelor's of Science in
Business Administration (Business Finance and Financial Economics - Summa
Cum Laude) from Michigan Technological University, USA, and Post Graduate
Diploma in Management from the Symbiosis Centre for Management and
Human Resource Development. He joined the company on April 1, 2005. Mr.
Piyush Rathi has over 10 years of experience in the enzymes industry. As the
Chief Marketing Officer, he is responsible for streamlining systems and processes
and identifying new growth avenues for company. He also spearheads sales and
marketing function and is actively involved in R&D initiatives, Human Resource
development activities and Information Technology.

Reasons to apply
1.
2.
3.

Leading player in the Enzyme market with two decades of experience

Integrated company with presence across the enzyme value chain
Diversified presence across geographies with strong development and
manufacturing capabilities

Reasons not to apply

1.
2.
3.

Nature of the business

Claims and outstanding liabilities
Associated companies and transactions

Advanced Enzyme Technologies Ltd- IPO

20th July, 2016

Concluding remarks
Advanced Enzymes has years of experience in the production of enzymes. The
company offers these products to more than 700 global customers across 50
countries around the world. The enzyme market is expected to grow at 6.3%
every year and reach US$ 7 bn in 2017. With limited competition in this space,
the existing players can have sufficient growth prospects. However, if one looks
at the company's revenues, the trend has been rather volatile.
Thus, there is not much clarity on the stability of future revenues. Over and
above, one also needs to take into consideration competition from the bigger
players. Further, there seems to be excessive family control in the business which
is already quite complex. And this could be a deterrent.
There is no other listed player in the domestic market. Novozymes, a Denmark
based biotech company and one of the leading players in this space trades at 35
times based on TTM earnings.
At the given band of Rs 880 and Rs 896, the stock of Advanced Enzyme
Technologies is valued at a P/E multiple in the range of 24.4-24.8 times its FY16
earnings, which appears to be on the higher side.
Taking into account these factors, our team recommend subscribers to ____ the
IPO.
For, more details in valuation, send mail us on equitykks@gmail.com subject
name mention IPO.
Note : Everything will not get free of cost. AIR & WATER is also costly but we
are not that much cost.

Advanced Enzyme Technologies Ltd- IPO

20th July, 2016