Divi's Laboratories, the Hyderabad-based pharmaceutical company in contract research and manufacturing, has entered the capital market on Monday with its Initial Public Offering (IPO) at a floor price of Rs 130 per share. The issue, to be made through 100 per cent book-building route, will close on Friday, February 21.
The company is offering 32.04 lakh equity shares of Rs 10 each, comprising 19.35 lakh shares from existing shareholders such as Peregrine Capital India and Kotak Mahindra Venture Capital Fund and 12. 70 lakh fresh shares.
A minimum of 25 per cent of the issue would be for allocation on a proportionate basis to retail bidders, while not less than 15 per cent of the shares would be available for allocation on a proportionate basis to non-institutional bidders and the remaining up to 60 per cent of the issue allocated on a discretionary basis to QIBs subject to valid bids being received at or above the issue price.
For retail bidders, the bid must be for a minimum of 100 Equity Shares and in multiples of 50 shares with a maximum of 1,000 shares. Bids in excess of 1,000 shares will be considered for allocation under the non-institutional category.
Addressing newsmen on the eve of the opening the IPO, Murali K Divi, Chairman and Managing Director of Divi Labs, said the promoters would not be reducing their equity stake in the current issue as announced earlier. The total equity of the company following the public issue would increase from Rs 11.55 crore to Rs 12.82 crore. The company would utilise the proceeds of the fresh issue for replenishing internal accruals of about Rs 42 crore invested for the setting up of its second manufacturing and R&D facilities near Visakhapatnam.
The equity shares would be listed on the Hyderabad, Bombay and the National Stock Exchanges.
Spelling out the company's strategy, Divi said it had been fully complying with IPRs and had been producing only patent-expired APIs using non-infringing processes or producing APIs and intermediates for the MNC patent-holders themselves. The company, he said, believed that its compliance with IPR had enabled it to de-risk its business model and position itself for the emerging scenario when IPR compliance would become mandatory from the year 2005.
Divi said the company was undertaking custom synthesis for select MNCs and serving 3 out of top 5 multinational companies and 5 out of 20 top MNCs. Commencing its operations in 1991 as a research and consulting organisation for developing commercial process for API and intermediates, the company currently manufactures over 60 products, some of the key products being Naproxene, Naproxene Sodium, Dextromethorphan Hydrobromide, Diltiazem and CIS Lactum.
The company earns more than 30 per cent of the revenue through custom synthesis. According to Divi, the company was working on custom synthesis of 98 molecules of multinational companies. The company gets about 70 per cent of its revenue by selling bulk drugs largely to the US and Europe.
For the year 2001-02, the company recorded a total income of Rs 220.25 crore and a net profit of Rs 36. 57 crore. For the 9 months ended December 31, 2002, the company recorded a total income of Rs 207 crore and it expects to close the year with a total income of Rs 275-300 crore.
The company has obtained ISO-9001, ISO-14001 and OHSAS-18001 for its manufacturing operations, quality systems, environment management systems and occupational safety and health procedures. The company's existing manufacturing facility had been successfully inspected by US FDA in 2000. It also obtained Certificate of Suitability (CoS) from the European Directorate.
The company's new manufacturing facility on a 314-acre site near Visakhapatnam is now under trial runs and commercial production will start sometime in March.