Indoco plans Rs 72.3 cr public offer

The Mumbai-based Indoco Remedies Ltd is on an expansion mode. The company is planning to set up a formulation plant at Baddi in Himachal Pradesh, an Active Pharmaceutical Ingredients (API) manufacturing plant at Goa and a research and development (R&D) centre at Mumbai to fuel its growth in the international market.

To fuel its plans the company is entering the capital market with an initial public offering (IPO) of 30 lakh equity shares of Rs 10 each for cash, at a price to be discovered from the book building process. The price band has been fixed at Rs 220 to Rs 245.

"We will be investing over Rs 23 crore for setting up a formulation plant at Baddi, Rs 22 crore for the API plant at Goa and Rs 16 crore for new R&D centre at Mumbai. To fund our expansion plans, we are entering the capital markets," said Suresh G Kare, chairman and managing director of Indoco Remedies in Ahmedabad on Tuesday.

"This IPO is a significant milestone for the company and would widen our investor base. Fund raised from IPO would also be used for repayment of loans for brand acquisition and purchase of office premises," added Kare.

Of the total proposed IPO, 50 per cent has been reserved for allotment, on a discretionary basis, to the qualified institutional buyers, and another 25 per cent is reserved for allotment on proportionate basis to non-institutional buyers. The balance 25 per cent will be allotted to retail bidders on a proportionate basis.

The issue would constitute 25.38 per cent of the fully diluted post issue paid-up capital of the company. After the IPO, promoters' stake of 79.75 per cent, would be reduced to 59.51 per cent.

For financial year ended June 2004, the company reported net profit of Rs 21.26 crore, a 44.90 per cent growth, on a net sales of Rs 156.69 crore. During the FY 2004, Indoco's exports grew from Rs 6.38 crore to Rs 13.40 crore, a 105 per cent rise. Profit before tax rose to Rs 29.084 crore from Rs 18.05 crore, a 65.10 per cent increase.