Gokul Refoils IPO

Gokul Refoils And Solvent Limited, a Gujarat based company, engaged in the business of solvent extraction, refining of Edible oils and Vanaspati manufacturing, proposes to raise Rs15bn with an Initial Public Offer (IPO).

The Objects of this issue are to set up a new 1500 TPD Soyabean processing plant near Gandhidham, expansion of its existing edible oil refinery at Surat, investment in its wholly owned Singapore subsidiary, funding part of its long term working capital, brand building activities, investment in increasing warehousing capacities and continuous Capex for existing units, general corporate purposes and public issue expenses.

Gokul Refoil started its business in 1982 and is primarily engaged in the business of Solvent Extraction, refining of Edible oils and Vanaspati manufacturing. The group's interest also includes power generation, commodity trading in the domestic and international markets.

The company markets its products under the brand name "Gokul" in the states of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh and Punjab. The brand enjoys a national recognition and the products are packed and sold include Mustard oil, Sunflower oil, Groundnut oil, Cottonseed oil, Palmolein oil, Vanaspati oil and Soya bean oil these are not only sold in in bulk quantities but also consumer retail packs of 15 Kgs, 15 Litre, 10 Litre, 5 Litre, 1 Litre and 500 ml.

Pan India distribution network spread across 19 States catered by 18 C&F agents and 802 distributors, 3 depots, 15 brokers and 295 resellers, distributing Gokul products through a total 1133 bulk points.

Gokul Refoils has setup a Solvent Extraction plant and an oil refinery at Sidhpur, Gujarat, a refinery of 800 TPD and Vanaspati plant of 100 TPD at Gandhidham, four environment friendly wind mills of 1.25 MW each in Kutch for captive power consumption and a 100 TPD operational refinery in Surat. It has also set up a co-generation power plant of 500 KWH at its Gandhidham unit. At present the company has 680 TPD of seed processing, 600 TPD of Solvent Extraction, 1200 TPD of refining and 200 TPD of Vanaspati manufacturing.

Towards expanding the scale of operations and having global presence Gokul Refoils has setup two wholly owned subsidiaries in Mauritius and Singapore under the name Maurigo Pte Limited and propose to invest approximately Rs250mn i.e. US$ ~6.10mn for enhancing the resources of the subsidiary.

Commenting on company's global expansion plans, Kanubhai Thakkar, MD, Gokul Refoils and Solvent limited said, “Singapore is the global hub of edible oil industry with all major oil suppliers having a base in Singapore. Currently we are sourcing about 1, 50,000 MT of Palm oil from Malaysia and Indonesia and 1, 00,000 MT of soyabean oil from Argentina and Brazil. If we have our presence in Singapore, we shall be in a position to negotiate locally and deal with the small and fragmented oil suppliers of Malaysia and Indonesia, which will further enable us to procure the raw materials at reasonable terms."

“Setting up of this office was a part of our long term strategy of increasing our foot print in the global markets to reduce the involvement of intermediaries and source raw materials from the producers. It will help us in procuring oil at reasonable terms and also providing assured supplies round the year. This global presence shall help us to improve the scope of exports of De-Oiled Cake and our margins in export of de-oiled cake," Said Thakkar.

Gokul Refoils consolidated total income for the financial years / period ended July 31, 2007, March 31, 2007, 2006 and 2005 was Rs6.57bn, Rs15.66bn, Rs12.55bn and Rs9.07bn respectively. The Company posted net profit for the said years / period was Rs207mn, Rs254.2mn, Rs123.4mn and Rs200.5mn respectively.