Steamhouse plans Rs 180 crore IPO debt repayment amid debt

Steamhouse plans to use Rs 180 crore of fresh-issue proceeds to repay or prepay borrowings in Fiscal 2027, against total outstanding borrowings of Rs 400.299 crore as of July 31, 2026. The allocation is the largest specifically quantified use of the planned proceeds, but the loans ultimately repaid may change before allotment.

How much of Steamhouse’s IPO proceeds is planned for debt repayment?

Steamhouse has allocated Rs 180 crore from net proceeds for repayment or prepayment of certain outstanding borrowings, including applicable interest obligations and prepayment penalties. The company expects to deploy the full amount in Fiscal 2027, assuming net offer proceeds are received by September 30, 2026, with no scheduled debt-repayment deployment in Fiscal 2028 or Fiscal 2029.

The fresh issue is proposed at up to Rs 353 crore before offer-related expenses, while the offer for sale is proposed at up to Rs 61 crore. Steamhouse will not receive the offer-for-sale proceeds, which will go to promoter selling shareholder Vishal Sarawprasad Budhchia after his share of expenses and taxes; therefore, debt repayment depends on the net proceeds from the fresh issue.

Debt repayment exceeds the Rs 114.127 crore combined allocation to the three named capital-expenditure projects by Rs 65.873 crore. General corporate purposes remain unquantified until the offer price is determined, and their use, including applicable offer expenses, cannot exceed 25% of gross proceeds under the Securities and Exchange Board of India’s Issue of Capital and Disclosure Requirements Regulations.

Which Steamhouse borrowings could IPO proceeds repay?

Steamhouse has identified term loans, non-convertible debentures, overdrafts and revolving facilities as possible candidates for repayment or prepayment. Non-convertible debentures, or NCDs, are debt securities that do not convert into equity; Steamhouse said it initially used NCDs for waste-to-steam projects because conventional banks were generally cautious about first-time projects.

Among the disclosed facilities, Axis Asset Management holds Rs 49.526 crore of NCDs outstanding at 12.75% as of July 31, 2026, Tata Capital has a Rs 39.907 crore term loan at 11.25%, and Aditya Birla Capital has a Rs 39.277 crore term loan at 11.50%. The Aditya Birla Capital facility is revolving, allowing Steamhouse to repay and re-use the limit for purchase payments, subject to scheduled reductions in drawing power.

The facilities listed for possible repayment total Rs 321.021 crore outstanding, compared with Steamhouse’s Rs 400.299 crore total outstanding borrowings on July 31, 2026. The Rs 79.278 crore difference shows that the disclosed repayment list is narrower than total borrowings, and the Rs 180 crore allocation does not commit Steamhouse to eliminate all debt or repay a fixed amount to each lender.

Prepayment costs differ by facility. Tata Capital’s loan carries no prepayment penalty when repaid from IPO proceeds, while the Axis Asset Management NCDs carry a 2% penalty and the Aditya Birla Capital facility carries a 1% penalty. Steamhouse intends to fund applicable penalties, interest and related costs from net proceeds, but says internal accruals will cover any shortfall.

How does debt repayment compare with Steamhouse’s expansion spending?

Steamhouse is planning to deploy debt-repayment funds sooner than its identified expansion spending. The Rs 180 crore repayment allocation is scheduled entirely for Fiscal 2027, whereas Rs 75.953 crore for Ankleshwar Phase 3 and Panoli Phase 2 is spread across Fiscal 2027 and Fiscal 2028, and Rs 38.174 crore for Dahej GIDC Phase 2 extends to Fiscal 2029.

The Rs 37.977 crore Ankleshwar Phase 3 allocation and Rs 37.976 crore Panoli Phase 2 allocation are almost equal, while Dahej GIDC Phase 2 receives Rs 38.174 crore. Steamhouse’s board approved the Ankleshwar expansion on August 18, 2026, and the proposed project involves installing a 60-tonnes-per-hour boiler that would raise Ankleshwar’s capacity from 120 tonnes per hour to 180 tonnes per hour.

The expansion plan follows recent growth in Steamhouse’s Gujarat operating network. The company had seven community steam boilers, six owned and one leased, with aggregate installed capacity of 345 tonnes per hour as of July 31, 2026, compared with 285 tonnes per hour in Fiscal 2025 and 270 tonnes per hour in Fiscal 2024.

Steamhouse’s cumulative installed pipeline length reached 57,041 metres in Fiscal 2026, up from 47,526 metres in Fiscal 2025 and 41,539 metres in Fiscal 2024. The company says repayment or prepayment is intended to reduce indebtedness and debt-servicing costs, leaving more internal accruals for business investment, but that result depends on completing the fresh issue and repaying facilities that remain outstanding at the time of deployment.

What could change in Steamhouse’s debt-repayment plan?

Steamhouse has not fixed the order of repayment or the amount to be repaid against each individual facility. Its selection will depend on borrowing costs, applicable interest rates, repayment restrictions, lender consents or waivers, prepayment charges, loan balances, remaining tenor, legal requirements and other commercial considerations.

Borrowing balances may change before allotment because Steamhouse makes intermediate repayments and drawdowns, particularly under working-capital facilities. If a listed loan is repaid, refinanced or further drawn before the offer is completed, Steamhouse may apply proceeds to additional borrowings and says the prospectus debt table will be revised where required.

The deployment schedule is based on management estimates, prevailing market conditions, interest-rate and exchange-rate movements, vendor quotations and a project report dated September 3, 2026, from chartered engineer Dr. P. J. Gandhi. No bank, financial institution or independent agency has appraised the planned deployment, and Steamhouse says changes in financial condition, government policy, competition or market conditions could require rescheduling.

If actual spending on an object is lower than planned, Steamhouse may use the balance for general corporate purposes within the 25% gross-proceeds regulatory limit. If net proceeds are insufficient or project costs rise, the company says it may use internal accruals or seek additional debt or equity arrangements.

Conclusion

Steamhouse’s Rs 180 crore debt-repayment allocation places borrowings reduction ahead of the Rs 114.127 crore combined allocation to its three identified expansion projects. Against Rs 400.299 crore of total outstanding borrowings as of July 31, 2026, the plan could reduce a substantial part of the debt load, but it does not establish a final post-offer debt balance.

The next point to watch is the prospectus update after the offer price and net proceeds are determined. Steamhouse has disclosed that loans may be repaid, refinanced or newly drawn before allotment, while lender approvals, prepayment costs and the final net proceeds will determine the facilities actually repaid.