Matrix Labs to invest Rs 100 cr this year

Company expects to record revenue growth of 35% at Rs 750 crore

City-based Rs 560-crore Matrix Laboratories Limited is slated to invest close to 50 per cent of the Rs 337.5 crore that it had raised through a recent preferential issue in the current fiscal itself.

The company is slated to invest about Rs 100 crore this year in a slew of activities which would include investments in related business lines and possible strategic investments.

The company recently said it would prepay all long term loans amounting to about Rs 68 crore from the proceeds of the preferential issue.

Matrix, a major manufacturer of APIs (active pharma ingredients) in the country, has recently realised about Rs 337.5 crore from the sale of a 15.4 per cent stake in the company to India Newbridge Investments Limited, an investment vehicle of US-based Newbridge Capital, and Maxwell(Mauritius) Private Limited, an investment vehicle of Singapore government-owned Temasek Holdings, at a price of Rs 1,500 per share.

C Ramakrishna, executive vice-president (corporate finance and corporate services) of Matrix Laboratories, told Business Standard that the investments this year would include about Rs 40 crore for the setting up of a corporate research and development centre.

"We have already announced that we will prepay all our long term loans amounting to about Rs 68 crore from the proceeds of the preferential issue. This apart, we will be investing a figure of close to Rs 100 crore from the money raised from the preferential issue into related business lines and some strategic investments. A firm decision on the investments would be made in the next three months," Ramakrishna said. He, however, refused to divulge the specific areas of investment.

Ramakrishna pointed out that the prepayment of the long term debt had enabled the company to be rid of the securities that were provided to the banks. "Some of the banks like Exim Bank and Rabo Bank had first charge on assets and now our assets are charge free," he said.

Matrix, according to Ramakrishna, expected to record revenues of about Rs 750 crore in the current fiscal, representing a growth of about 35 per cent. The bottomline growth of the company is expected to keep pace with the growth in topline, though Ramakrishna was not willing to commit on any numbers.

Matrix had in its most recent announcement indicated that while it expected to complete the prepayment of the long term loans in a month's time, the surplus money would be invested in liquid funds and mutual funds, which were absolutely safe.

Being highly risk averse, the company should at a conservative estimate get returns of about four per cent on its investments in the liquid funds.

Matrix had reported a net profit of Rs 135 crore for the last financial year, an increase of 80 per cent over the Rs 75.14 crore it had recorded during the preceding financial year. The company has also managed to de-risk its business strategy in terms of products, markets and manufacturing locations.

While its flagship product Citalopram contributed 33 per cent to the sales during the last fiscal, as against 50 per cent in the preceding year, the contribution of ARVs (anti-AIDS products) increased to 24 per cent during the year. Eleven newly introduced products had contributed significantly to the balance sales.

The company has filed four DMFs with US FDA during the last quarter, taking the total number of DMFs filed with US FDA to 15.

The company is working on a target to file at least 18 DMFs with the US FDA during the current financial year. As far as European markets are concerned, the company has filed DMFs for 18 products so far.