Madhusudan Masala IPO Closing Subscription Details

The IPO of Madhusudan Masala Ltd closed on Thursday, 21st September 2023. The IPO had opened for subscription on 18th September 2023. Let us look at the final subscription status of Madhusudan Masala Ltd at the close of subscription on 21st September 2023. The price band for the IPO was fixed at ₹66 to ₹70 per share and the stock has a face value of ₹10.

About the Madhusudan Masala IPO

The ₹23.80 crore IPO of Madhusudan Masala Ltd comprises entirely of a fresh issue with no offer for sale (OFS) component. The Fresh Issue portion of Madhusudan Masala Ltd entails the issue of 34 lakh shares at which at the upper band of the price range at ₹70 per share aggregates to ₹23.80 crore. The stock has a face value of ₹10 and retail bidders can bid in minimum lot size of 2,000 share each. Thus, the minimum investment of ₹140,000 in the IPO is the base limit. That is also the maximum that a retail investor can apply for in the IPO.

HNIs / NIIs can invest in a minimum of 2 lots of 4,000 shares worth ₹280,000 as the bare minimum investment. There is no upper limit for the HNI / NII category or even for the QIB category. Madhusudan Masala Ltd will deploy the funds for working capital needs and for general corporate purposes. Post the IPO, the promoter equity in the company will get diluted from 100.00% to 73.64%. The issue is lead managed by Hem Securities Ltd, while KFIN Technologies Ltd will be the registrars to the issue. Let us now turn to the final subscription details of the IPO as of the close of subscription on 21st September 2023.

Final subscription status of Madhusudan Masala IPO

Here is the subscription status of the Madhusudan Masala IPO as at close on 21st September 2023.

The issue was open for retail investors, QIBs and for the HNI / NIIs. There was a broad quota designed for each of the segments viz. the QIBs, the retail and the HNI NII. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO. A total of 1,72,000 shares were allocated as market maker portion to Hem Finlease Ltd, which will act as a market maker to provide bid-ask liquidity on the counter post listing. Market maker action not only improves liquidity in the counter but also reduces the basis risk.

As can be seen, from the above table, the company had allocated 28.41% of its original issue size to anchor investors. The anchor allotment was done on 15th September 2023 and the anchor allocation was spread across 6 anchor investors. All anchor allocations were done at the upper end of the price band at ₹70 per share. Here is a list of anchor allocations made accounting for the 9,66,000 shares allotted to anchors.

• Allocation to Meru Investment Fund PCC – 2,46,000 shares (25.47%) of anchor.
• Allocation to Knightstone Capital LLP – 1,44,000 shares (14.91%) of anchor.
• Allocation to Next Orbit Ventures Fund – 1,44,000 shares (14.91%) of anchor.
• Allocation to FINAVENUE Growth Fund – 1,44,000 shares (14.91%) of anchor.
• Allocation to NAV Capital Emerging Star Fund – 1,44,000 shares (14.91%) of anchor.
• Allocation to Rajasthan Global Securities – 1,44,000 shares (14.91%) of anchor.

The anchor portion overall was adjusted to the overall QIB quota, which was reduced to that extent.

How subscription built up for the Madhusudan Masala IPO

The oversubscription of the IPO was dominated by the Retail segment followed by the HNI / NIIs and the QIB investors in that order. The table below captures the day-wise progression of the subscription status of Madhusudan Masala Ltd IPO.

It is clear from the above table that both the retail portion and the HNI / NII portion got substantially oversubscribed on the first day of the IPO itself. Even though the QIB portion got fully subscribed only on the second day, the overall IPO was fully subscribed on the first day itself although most of the traction was seen on the last day. All the 3 categories of investors viz., HNIs / NIIs, retail and QIB categories saw good traction and build up of interest on the last day of the IPO. There is an allocation of 172,000 shares to Hem Finlease Ltd for market making. The market maker offers two way quotes on the stock post listing using the inventory of shares and ensures that investors do not get overly worried about liquidity and basis risk in the early stages.

The IPO of Madhusudan Masala Ltd opened for subscription on 18th September 2023 and closed for subscription on 21st September 2023 (both days inclusive). The basis of allotment will be finalized on 26th September 2023 and the refunds will be initiated on 27th September 2023. In addition, the demat credits are expected to happen on 29th September 2023 and the stock is scheduled to list on 03rd October 2023 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated.

A quick word on Madhusudan Masala Ltd and the SME IPO

Madhusudan Masala Ltd is an established company engaged in the manufacturing, processing, and marketing of more than 32 different types of spices (in Hindi Masala refer to spices). These spices are sold under the popular brand names of "DOUBLE HATHI" and "MAHARAJA". The company has two broad business verticals. The first vertical is Ground spices; which includes different varieties of chilli powder, turmeric powder, coriander powder, cumin powder etc. The second vertical is for blended spices and this segment includes the focused item-specific blends like garam masala, tea masala, chhole masala, sambhar masala, pav bhaji masala, Kitchen King Masala, Chicken Masala, Meat Masala etc. It also sells pounded masalas like dry ginger powder, black pepper powder, Amchur, etc.

The company has been promoted by Dayalji Kotecha, Vijaykumar Kotecha, Rishit Kotecha, and Hiren Kotecha. The promoter holding in the company currently stands at 100%. However, post the fresh issue of shares, the promoter equity shareholding will reduce to 73.64%. The fresh issue funds will be used by the company for meeting its working capital funding gaps and for general corporate expenses. Part of the monies raised will also go towards meeting the expenses of the issue.     While Hem Securities Ltd will be the lead manager to the issue, KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Hem Finlease Ltd.