SFC Environmental Technologies Limited is an environmental technology company offering efficient technologies and comprehensive engineering solutions in the field of wastewater treatment (“WWT”) and solid waste treatment (“SWT”) has filed its draft red herring prospectus (DRHP) with SEBI to raise funds through its initial public offering (IPO).
The IPO with the face value of ₹ 2 per equity share, is a mix of fresh issue of up to ₹ 185 Crore and an offer for sale up to 10.82 million equity shares by Promoters and Other Selling Shareholders.
The Offer for Sale consists of shareholders selling up to 12.65 lakh equity shares by Saketchandrasingh Pratapsingh Dhandoriya, up to 6.88 lakh equity shares by Sandeep Sambhaji Parab, up to 27.12 lakh equity shares by Sandeep Sudhakar Asolkar (held jointly with Priya Sandeep Asolkar), and other selling shareholders.
The company intend to utilize a portion of the net proceeds to the extent of Rs 54.95 crore for prepayment of all or a portion of certain outstanding borrowings availed by the Company and its wholly owned Subsidiary, namely Vasudha Waste Treatment Private Limited, Rs 90.69 crore for funding its working capital requirements, and general corporate purposes.
The company, in consultation with the BRLMS, may consider a further issue of specified securities, aggregating up to ₹ 37 crore (Pre-IPO placement). If the Pre-IPO placement is completed, the amount raised pursuant to the Pre-IPO placement will be reduced from the fresh issue.
The Offer is being made through the book-building process, wherein not more than 50% of the net offer is allocated to qualified institutional buyers, and not less than 15% and 35% of the net offer allocated to non-institutional and retail bidders respectively.
SFC operates through two main divisions: Wastewater Treatment (WWT) and Solid Waste Treatment (SWT). As of September 30, 2024, SFC Environmental Technologies had an order book of ₹631.49 crore comprising of 222 ongoing and upcoming projects.
SFC Environmental Technologies compares itself with Thermax Limited, Praj Industries Limited and Ion Exchange (India) Limited, as mentioned in the DRHP.
SFC Environmental Technologies, established in 2005, specializes in the design, technology, manufacturing, supply, and supervision of equipment for wastewater treatment. The company has completed 621 wastewater treatment (WWT) installations, primarily focused on sewage treatment plants (STPs). It holds a dominant position in India, commanding over 80% of the market share in sequencing batch reactor (SBR) technology—a crucial method for wastewater treatment—according to the F&S Report mentioned in the DRHP, as of September 30, 2024.
The Company is a market leader in the municipal solid waste (MSW) sector, SFC offers comprehensive solutions backed by strong operational results. Its core technology for solid waste management is the proprietary Organic Extraction (OREX) system, designed for efficient waste processing.
The company is one of the few players adapting global technologies in the MSW sector to meet India’s unique requirements. Its wastewater treatment solutions process 14,812.86 million liters daily (MLD). SFC’s CTech technology underpins some of India’s largest SBR-based STPs, including a facility under development with a capacity to treat 375 MLD wastewater, as of November 2024.
The OREX technology efficiently separates biodegradable organics, inorganics, and lignocellulosic fibers from mixed municipal waste. The company has built and operates two integrated SWT facilities in Goa in partnership with Goa Waste Management Corporation (GWMC). These facilities generate biogas, compost, and recover recyclables, operating under public-private partnership and turnkey models.
SFC Environmental Technologies collaborates with a diverse range of clients and partners. Its WWT customers include prominent EPC players such as Enviro Control Pvt. Ltd., Vishvaraj Environment Pvt. Ltd., Ramky Infrastructure Ltd., and Toshiba Water Solutions Pvt. Ltd. In the SWT segment, the Goa Waste Management Corporation (GWMC) is a key client. Additionally, the company’s major suppliers include TurboMax Co. Ltd., Smicon B.V., Yucheon International Co. Ltd., IST-Anlagenbau GmbH, and others.
Revenue from operations increased by 26.69% to ₹658.39 crore for Fiscal 2024 from ₹519.69 crore for Fiscal 2023, primarily attributable to an increase in its sale of goods; and other operating revenues. Profit after tax increased by 52.07% to ₹144.17 crore for Fiscal 2024 from ₹94.81 crore for Fiscal 2023.
For the three months ended June 30, 2024, revenue from operations stood at ₹94.09 crore and profit after tax stood at ₹6.50 crore.
India’s wastewater treatment market is growing due to opportunities in the industrial and municipal sectors. The industry has maintained a 5.5% CAGR over the past five years and is projected to accelerate to 9.6% growth in the next five years. The revenue potential is likely to increase to ₹25,750 crore by Financial Year 2028, growing at a CAGR of 10.6%, according to a F&S Report.
IIFL Capital Services Limited, JM Financial Limited, and Nuvama Wealth Management Limited are the book-running lead managers and Link Intime India Private Limited is the registrar to the issue. The equity shares are proposed to be listed on National Stock Exchange of India Limited and BSE Limited.
DRHP Link: https://www.iiflcap.com/Upload/InvestmentBanking/Prospects/SFC_ENVIRONMENTAL_TECHNOLOGIES_LIMITED_DRHP.pdf
