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Divi's Laboratories' Initial Public Offer opens on February 17
Our Bureau, Mumbai | Monday, February 10, 2003, 08:00 Hrs  [IST]

Divi's Laboratories, a leading contract research and manufacturing company based in Hyderabad, is set to enter the capital market with its Initial Public Offering (IPO). The company has opted for the 100 per cent book building method for efficient price discovery of its equity shares, the floor price for which has been fixed at Rs.130 per equity share of face value of Rs.10 each. The issue will open on Monday, February 17, 2003 and close on Friday, February 21, 2003.

Divi's Laboratories is offering 32,04,684 equity shares comprising fresh issue of 12,69,673 equity shares of Rs. 10 each and an offer for sale of 19,35,011 equity shares of Rs. 10 each. The total equity of the company pursuant to the public issue will increase from Rs. 11.55 crore to Rs. 12.82 crore.

The equity shares are proposed to be listed on the Hyderabad, Bombay and the National Stock Exchanges. The company intends to use the net proceeds of the fresh issue for replenishing internal accruals used for the setting up a second manufacturing facility near Visakhapatnam, Andhra Pradesh.

The Company has a multi purpose manufacturing facility on a 300 acre site located near Hyderabad in Nalgonda District of Andhra Pradesh. The facility is nearing full utilization. As a part of its plan to augment the manufacturing capacity, the company is in the process of setting up a second manufacturing facility spread over 314.85 acres at a cost of Rs. 40.22 crore. This second site, besides expanding he manufacturing capacity for Active Pharmaceutical Ingredient (API) and intermediates, would also provide comfort to its multinational customers of an alternate plant site and secured supply. The commercial production at this facility is expected to commence by March 1, 2003.

The Company commenced its operations in 1991 as a research and consultancy organization for developing commercial processes for API and intermediates. In 1995, it commenced production of Naproxen with the objective of producing generic/APIs and intermediates as well as APIs/intermediates for discovery compounds of Multinational Pharmaceutical Companies (MNCs). Currently it manufacturers over 60 products, some of the key products being Naproxene, Naproxene Sodium, Dextromethorphan Hydrobromdie, Diltiazem, CIS Lactum, and X-ray contrast media.

After developing and marketing generic APIs and their intermediates, the Company started working towards its goal of undertaking custom synthesis for select MNCs by developing intermediates for the New Chemical Entities (NCEs) being developed by them. Presently the company is working with select MNCs in providing intermediates for their various products, which are at different stages of drug development or commercial launch.

Commenting on the eve of the IPO, Murli K Divi, chairman and managing director, Divi's Laboratories said, “Our expertise in contract research and manufacturing and association with MNCs for their products at different levels of development has enabled us to derisk our business model. We are confident that investors will appreciate our business model and we hope to widen our investor base with this public Issue”.

Since commencement of manufacturing operations the Company had been fully complying with IPRs and has been producing only patent-expired APIs using non-infringing processes or producing APIs and intermediates for the MNC patent-holders themselves. The Company believes that its compliance with IPR has enabled it to derisk its business model and position itself for the emerging scenario where IPR compliance would become mandatory from January 2005 onwards.

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