Indoco Remedies IPO

[TATrader]

Indoco Remedies IPO

Indoco Remedies is planning to come out with a public issue, of 30 lakh equity shares, worth between Rs 50-100 crore, through a 100% book-building process. CMD Suresh Kare says the IPO proceeds will help the company meet its growth targets, and adds, that Indoco is now focussing on the export market.

The company has already filed a red herring prospectus for the issue at Rs 10 per share. The issue represents 25.38% of the fully diluted post issue paid-up capital of Indoco. The company's post issue promoter holding will then be 59.51%.

The proceeds from the IPO will be reportedly used for investment in subsidiary Indoco Healthcare, to set up plant at Baddi in Himachal Pradesh, for the repayment of unsecured term loans for brand acquisitions, and to repay loans for the company's office premises' acquisition.

Exports to lead growth, going forward: Kare

Kare told CNBC-TV18, "The major thrust will be on exports. Last year we grew by 102% on export funds. With this IPO, we are going to set up new plants at Baddi, an API plant, and a R&D centre, with the sole intention of focussing on export. I expect excellent returns from exports."

Indoco exports paracetamol, metformin and amiodarone tablets to Europe. Branded formulations and APIs are also exported to Central America and the Asia Pacific (ASPI.BO, news) , as well as some African countries. But Kare expects exports to the UK to climb by 200%, by the end of this year. "We have sufficient orders in hand, and because our plant in Goa is approved by the UK-MHRA, we have got an excellent response from the UK, where we expect to grow by 200% this year."

At the end of June, Indoco's sales were up 23%, to Rs 177.6 crore, while its net profit climbed 51%, to Rs 21.26 crore. Kare added, "Although the industry's growth has been slow in the last two years, our company has done extremely well in the last year, and hit a growth of 18%. We are introducing a number of lifestyle segment products that are doing extremely well, and I expect growth to come from this segment, as also from exports."

Further acquisitions on the cards: Kare

Recently, the company acquired Karvol, in the decongestive inhalant segment, from Solvay Pharma India. While the outstanding loan for the acquistion will be paid through the expected IPO funds, Kare does not rule out further acquisitions, going forward.

He said, "We are always looking for new acquisitions. In 1999, we acquired Warren Pharmacy, which had good dental and ophthalmic segment sales, and after managing it well, we amalgamated the company with the parent company, Indoco. Karvol is only a two-month old story; we borrowed Rs 9.5 crore to acquire it, which will be paid back through the proceeds of the IPO."