Bombay Coated targets Rs 125 crore for IPO debt repayment

Bombay Coated plans to use Rs 125 crore of initial public offering net proceeds to repay or prepay borrowings, making debt reduction its largest identified use of funds. The allocation compares with aggregate outstanding borrowings of Rs 302.428 crore as of August 31, 2026, and is scheduled for deployment in Fiscal 2027.

How much of Bombay Coated’s IPO proceeds will go to debt repayment?

Bombay Coated has earmarked Rs 125 crore from net proceeds for repayment or prepayment, in full or in part, of certain borrowings. The company may use this amount for accrued interest and applicable prepayment charges, while the aggregate amount used for this object cannot exceed Rs 125 crore.

The debt allocation is the largest quantified object of the fresh issue, which could raise up to Rs 183.057 crore before issue expenses, subject to full subscription. Bombay Coated has also allocated Rs 15.77 crore to acquire capital equipment under lease arrangements with Siemens Financial Services Private Limited, while the allocation for general corporate purposes remains to be finalised after the issue price is determined.

Bombay Coated states that the general-corporate-purpose amount cannot exceed 25% of gross proceeds under the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations. That component also cannot be used to repay loans advanced to Bombay Coated by its promoters or directors.

Which Bombay Coated facilities could receive IPO repayment funds?

Bombay Coated has identified seven bank facilities with combined outstanding balances of Rs 181.064 crore as of August 31, 2026 for possible repayment or prepayment. The Rs 125 crore allocation therefore covers less than the balances under the identified facilities and does not commit Bombay Coated to fully extinguish any individual loan.

The seven facilities comprise two term loans and five working-capital facilities. A working-capital demand loan, or WCDL, is a borrowing used to finance operating requirements; the listed working-capital structures also include cash credit, channel finance and purchase-bill discounting.

The two term loans, used for capital expenditure, had combined outstanding balances of Rs 24.195 crore on August 31, 2026. The five working-capital facilities had Rs 156.869 crore outstanding, showing that working-capital borrowings account for most of the facilities identified for potential IPO-funded repayment.

Why is Bombay Coated targeting IPO debt repayment?

Bombay Coated says repayment or prepayment is intended to reduce outstanding indebtedness and debt-servicing costs. The company expects the resulting reduction in finance costs to allow greater use of internal accruals for business growth and expansion, while an improved debt-to-equity ratio is intended to support future resource raising.

Aggregate borrowings of Rs 302.428 crore on August 31, 2026 were Rs 121.364 crore higher than the Rs 181.064 crore balance across the seven specifically identified facilities. This means the proposed IPO allocation addresses only part of Bombay Coated’s total borrowing base, even if the full Rs 125 crore is deployed for debt repayment.

Interest rates on the listed facilities range from 7.55% for HSBC Bank’s cash-credit/WCDL facility to 9.00% for DBS Bank India’s term loan. The eventual change in finance cost will depend on the facilities selected, their balances at repayment, lender consents, applicable penalties and whether Bombay Coated draws additional credit before the issue is completed.

Bombay Coated operates as a steel processing centre, or SPC, providing processing services to primary steel producers and end-users. As of June 30, 2026, its installed processing capacity was 1,23,153 metric tonnes per annum, computed on a quarterly basis for Fiscal 2027, requiring continued funding for working capital and plant and machinery alongside debt reduction.

How will Bombay Coated decide which loans to repay?

Bombay Coated will choose the facilities for repayment or prepayment using commercial considerations rather than a fixed lender-by-lender allocation. The company lists the outstanding amount, interest rate, remaining tenor, repayment restrictions, lender consents, prepayment penalties and repayment schedule among the factors that will guide its selection.

Bombay Coated will approach the relevant lenders after completion of the issue. Consequently, the August 31, 2026 balances may change before deployment because a facility may be repaid, refinanced, further drawn down or replaced by an additional credit facility.

The prospectus permits Bombay Coated to use the debt-repayment allocation for refinanced facilities or additional facilities obtained before completion of the issue, within the Rs 125 crore ceiling. If the proceeds do not cover prepayment penalties, interest or other related costs, Bombay Coated says the shortfall will be met through internal accruals.

Several listed working-capital facilities have already changed. Kotak Mahindra Bank’s Rs 50 crore working-capital limit included Rs 15 crore taken over from ICICI Bank in January 2025 and Rs 10 crore from SVC Cooperative Bank in November 2025, while DBS Bank India’s working-capital limit was enhanced from Rs 20 crore to Rs 60 crore in November 2025, of which Rs 40 crore had been released.

What other spending will accompany Bombay Coated’s debt reduction?

Bombay Coated plans to use Rs 15.77 crore to acquire capital equipment leased from Siemens Financial Services Private Limited. The amount is based on pre-closure statements dated September 15, 2026 and covers equipment with an aggregate original cost of Rs 21.997 crore.

The equipment includes slitting, cut-to-length and embossing lines, along with two double-girder electric overhead travelling cranes installed at Bombay Coated’s Ghiloth facility. The master lease agreement dated August 6, 2024 provides for fixed monthly rentals over 60 months and a purchase option at fair market value after the 12-month early-termination period.

Bombay Coated reported lease and rental expenses of Rs 4.686 crore in Fiscal 2026, compared with Rs 2.472 crore in Fiscal 2025 and nil in Fiscal 2024. The company says owning the machinery is intended to reduce recurring lease and rental expenses, support future capacity expansion and avoid possible disruption associated with lease expiry or lessor restrictions.

The planned deployment has not been appraised by a bank, financial institution or independent agency. Bombay Coated has appointed a monitoring agency to report quarterly on net-proceeds utilisation under Regulation 41 of the SEBI regulations, although the company may reschedule deployment if market conditions, interest rates, costs or business requirements change.

Conclusion

Bombay Coated’s proposed use of IPO proceeds places debt repayment ahead of its other identified spending: Rs 125 crore is designated for borrowings, against Rs 15.77 crore for leased-equipment acquisition. The company has identified seven facilities with Rs 181.064 crore outstanding, but its total borrowings were higher at Rs 302.428 crore on August 31, 2026.

The next disclosed milestone is Fiscal 2027, when Bombay Coated intends to deploy both the Rs 125 crore debt allocation and the Rs 15.77 crore equipment allocation. The final lender selection remains unresolved because it depends on balances, refinancing, lender approvals and prepayment terms at the time the issue is completed.