The Vadodara-based Sanghvi Forging and Engineering has filed Draft Red Herring Prospectus with SEBI to raise Rs 42.50 crore through an initial public offer. It has proposed to use the IPO process to part-finance its Rs 120-crore expansion plan.

Forging unit

The company will set up 15,000 tonnes a year open-die forging unit (with single piece forging up to 40 tonnes) to manufacture forgings such as stepped shafts, bars and hollows, blocks, flanged shafts, gear blanks and forging items at Vadodara.

Currently, these products used in wind energy, oil and gas, steel, power, pressure vessel, petrochemical, sugar industries and nuclear plants are generally imported. The project will go on stream in May 2012, the company said.

The project has been appraised and part financed by State Bank of India, which has extended a term loan of Rs 50 crore. Bank of Baroda will chip in Rs 22 crore as debt. The equity shares will be listed on Bombay Stock Exchange and National Stock Exchange.

Performance

It has recorded net profit of Rs. 2.48 crore on sales of Rs 29 crore in the financial year 2009-10. The company's net worth on a consolidated basis was Rs 12 crore on March 31, 2010. The net asset value/equity share of Rs 10 each was Rs 27.49.

The company, which manufactures standardised and customised products, has an installed capacity of 3,600 tonnes/annum with a single piece forging up to four tonnes in the area of open and closed die forging.

Approved vendor

Exports to Europe, West Asia and Canada constitute about 20 per cent of the company's top-line. It is an approved vendor to companies such as Engineers India, Mecon, UHDE, Toyo, BARC, GE, ISRO, Kuwait Petroleum.

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