Divi's plans to raise $12mn through foreign currency loan

Hyderabad-based Divi's Laboratories Limited is planning to raise $10 million-$12 million through foreign currency debt to fund its expansion plans.

The Rs 365-crore pharma major had earlier announced that it was building a new facility in Unit-2 at Visakhapatnam at an estimated cost of Rs 80 crore, besides implementing a speciality ingredients project worth Rs 30 crore.

Speaking to Business Standard, L Kishore Babu, chief financial officer, Divi's Labs, said, "We have already raised $6 million from State Bank of India, Bahrain, for the Rs 30-crore expansion plan. We are now contemplating raising $10 million-$12 million, again in the form of foreign currency loan, for the Rs 80-crore expansion plan."

While the speciality ingredients project will go onstream from April 1, 2006, the Rs 80-crore new facility for active pharmaceutical ingredients (APIs) will take 12-15 months to be completed.

"We are already in discussions with a few banks and will be tying up the finances soon," Murali K Divi, chairman and managing director of Divi's Labs, said. This will be a short-term loan, he added.

The company is not looking at diluting its existing shareholding. "I do not find the need to," Divi said.

As on June 30, 2005, the promoters of the company hold 53.99 per cent shares of the company, with the share of Indian promoters being 53.93 per cent and 0.06 per cent being that of foreign promoters.

The non-promoters hold 25.93 per cent of the company's share capital and the others including private corporate bodies, Indian public, NRIs, independent directors and so on, hold the remaining 20.08 per cent.

Divi's Labs has two manufacturing facilities, one at Nalgonda, 60 kilometres from Hyderabad, and the other at Vizag.

These facilities are primarily involved in the manufacture of APIs and intermediates for generics, APIs and advanced intermediates for discovery compounds (custom synthesis), building blocks for peptides and nucleotides, carotenoids and chiral ligands. Its product portfolio comprises around 90 products and exports constituted 88 per cent of its turnover last year.

The company earned a total income of Rs 68 crore for the first quarter ended June 30, 2005, as compared to Rs 66 crore during the corresponding previous quarter of last year, and a profit after tax of Rs 12.76 crore as compared to Rs 14.34 crore during the first quarter of last year.