Mumbai-based Sanathan Textiles, with presence across the polyester, cotton and technical textile sectors, has filed its draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering IPO.

The issue size is expected to be in the range of Rs1,200-1,300 crore, said a person aware of the company’s plans.

The IPO comprises a fresh issue of equity shares of ₹500 crore and an offer for sale of up to 11,400,000 equity shares by the promoter Dattani Family.

Additionally, the company, in consultation with the lead bankers to the issue may consider a pre-IPO placement of equity shares aggregating up to ₹100 crore.

Proceeds from the fresh issuance of shares will be used to the extent of ₹325 crore to repay/prepay in full or part, of certain borrowings availed by the company, ₹65 crore for funding working capital requirements besides general corporate purposes.

Sanathan Textiles Limited was incorporated in 2005 by the Dattani family.

Its business is divided into three separate yarn business verticals, consisting of Polyester yarn products; Cotton yarn products; and Yarns for technical textiles and industrial uses, manufactured at its Silvassa facility.

Over the years, the company has scaled up its yarn production with a total capacity from 4,500 MTPA in 2006 to 221,050 metric ton per annum (MTPA) in 2021 supplying across a broad spectrum of industries such as apparels including sportswear, activewear and innerwear, home textiles, travel and leisure (luggage, suitcases, parachutes, etc.), medical usages, automobiles, etc.

Sanathan also has a high share of value added products which contributed 52.16% of the revenues for the six months period ended September 30, 2021. As of September 2021, they manufacture more than 12,900 varieties of yarn products.

The company caters to a number of multinational, regional and local companies such as Arvind Ltd, Trident Ltd, Welspun India Ltd, Page Industries Ltd, D’décor Home Fabrics Pvt Ltd and also to other companies including Creative Group, Ascent Yarns and Paragon which in turn cater to consumer brands like DKNY, Calvin Klein, Zara, US Polo Association, Adidas, Nike, H&M, Levis, Uniqlo and many more.

Sanathan Textiles recorded a profit of ₹185.63 crore on revenue of ₹1,918.36 crore for FY21 which had impact of lockdown during April-June 2020, and clocked a profit of ₹170.78 crore on revenue of ₹1,438.88 crore for the six month ended September 2021. Company had a healthy return on equity (RoE) of 29.42% for FY21.

Edelweiss Financial Services Limited and JM Financial Limited are the book running lead managers to the issue.