Leading manufacturer of chemicals and allied products Chemplast Sanmar Ltd has filed a draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI) to raise Rs 3,500 crore through an initial public offering (IPO).

The proposed IPO of the company, which was delisted in 2012, comprises a fresh issue of equity shares worth Rs1,500 crore and an offer for sale of Rs2,000 crore by its current promoters and shareholders, according to DRHP. The offer for sale comprises the sale of Rs1,850 crore by Sanmar Holdings Ltd and Rs150 crore by Sanmar Engineering Services Ltd.

The company said it would utilise an aggregate amount of Rs 1,238.25 crore from the net proceeds towards early redemption of the non-convertible debentures (NCDs) issued by it. In addition, funds will also be used for general corporate purposes. 

"The early redemption of the NCDs in full will help reduce our outstanding in indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion," the company said in the draft papers.

"In addition, we believe that our improved leverage ratio, consequent to such redemption of NCDs, will improve our ability to raise debt in the future to fund potential business development opportunities and plans," it added.

Also, the company expect to achieve the benefits of listing the equity shares on the stock exchanges.

ICICI Securities and Axis Capital among other investment banks are advising the company on the IPO.