Varmora Granito Limited

Draft Red Herring Prospectus dated August 7, 2025

Summary

Varmora Granito Limited is proposing to raise ₹400.00 crore through a fresh issue of shares, alongside an offer for sale of 5,24,35,268 shares by existing shareholders. The document does not yet state the price.

About 70% of the fresh issue proceeds go to repayment/pre-payment of outstanding borrowings availed by the company, and about 10% to repayment/pre-payment of outstanding borrowings availed by wholly-owned subsidiaries (Covertek Ceramica, Varmora Sanitarywares) and Simola Tiles LLP. The amount for general corporate purposes is not yet stated.

The review found 7 points to read closely and 8 worth checking.

Read closely

1. Criminal proceedings
2. Director resignations
3. Proceeds used to repay debt
4. Audit qualifications, emphasis of matter or adverse CARO remarks
5. Auditor changes
6. Profit depends on other income
7. Figures disagree between sections of the document

How the capital was built

• The last priced issue of shares was on 16 Dec 2024: 17,96,998 shares to non-promoter investors at ₹97.81 each (1 allottee); it came 8 months before this prospectus.

Conclusion

Of the 7 points to read closely, 2 concern the promoters, management and their dealings (criminal proceedings; director resignations), 1 concerns how the IPO money will be spent, 3 concern the financial statements and 1 concerns the business, the valuation or the quality of disclosure. These could not be scored automatically and need reading: a small, high-priced issue of shares shortly before the IPO; group entities in the same business; contingent liabilities. These wait for the price and the final share count: shares issued shortly before the IPO at a deep discount to the issue price; low promoter holding after the issue; issue price is a large multiple of promoters' cost. The pages to read are 47–48, 85, 118, 269, 341 and 367.