The Hindu : Divi's Lab to tap market through book building

Online edition of India's National Newspaper
Friday, Feb 14, 2003

Business

Business

Divi's Lab to tap market through book building

By Our Corporate Reporter

CHENNAI FEB. 13. Divi's Laboratories, a leading contract research and manufacturing company based in Hyderabad, is coming out with an initial public offer through book building route. The offer size is 32.05 lakh equity shares of Rs. 10 each comprising fresh issue of 12.70 lakh shares and an offer for sale of 19.35 lakh shares. The floor price has been fixed at Rs. 130 per share and the issue is open from February 17 to 21.

Addressing presspersons here today, Murali K. Divi, Chairman and Managing Director of the company, said the net proceeds of the issue would be used to replenish internal accruals used for establishing the second manufacturing facility near Visakhapatnam. The outlay involved on this facility was Rs. 40.22 crores. Commercial production was slated to commence by March 1.

The first plant is located near Hyderabad with 11 multi-purpose production blocks primarily manufacturing active pharmaceutical ingredients (API) and intermediates for generics, advanced intermediates for discovery compounds, carotenoids, protecting agents and building blocks for peptide chemistry and nucleotide chemistry.

The Vizag facility would increase the capacity of API and provide comfort to the company's multinational customers for assured supply of products.

The company was working with select MNCs in providing intermediates for their various products, which were at different stages of drug development or commercial launch, Mr. Divi said.

The company had been producing only patent-expired APIs using non-infringing processes or producing APIs and intermediates for the MNC patent-holders themselves. Complying with rules related to IPRs (intellectual property rights), had enabled the company to derisk its business model and position itself for the emerging scenario where IPR norms compliance would become mandatory from January 2005 onwards, the CMD said.

Commenting on the performance, Mr. Divi said the company recorded a total income of Rs. 220.25 crores and a net profit of Rs. 36.57 crores in the year ended March 31, 2002. A dividend of 50 per cent was paid in that year. In the six months ended September 30, 2002 the turnover was Rs. 122.03 crores and the net profit Rs. 22.61 crores, he said. The company's financial position was comfortable. Eventhough it was sanctioned with Rs. 40 crore loan for expansion and new schemes, it could use only Rs. 1 crore out of it and the balance had been met with internal accruals, Mr. Divi said.

After the public issue the total equity of the company would increase to Rs. 12.82 crores from Rs. 11.55 crores.

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