Nectar plans IPO to make drugs

Chandigarh-based Nectar Lifesciences Ltd, a pharmaceutical company incorporated as Surya Medicare Ltd (SML) in 1995, is set to come out with an initial public offer of Rs 90 crore for expansion.

The company is rolling out an initial public offer to finance the production of sterile Cephalosporin, approved by the US Food and Drug Administration, at Derabassi near Chandigarh, and a formulations facility at Baddi in Himachal Pradesh.

The resources raised would be utilised also in research and development and at the Corporate Quality Control Centre of the company to be put up at Derabassi.

The IPO consists of 3,870,000 equity shares of Rs 10 each. The offer will constitute 26 per cent of the fully diluted post-offer paid-up capital.

Nectar Lifesciences is one of the few companies in India having facilities to manufacture oral and sterile bulk drugs, and it supplies to major pharma players in the Indian and global markets.

The company had recorded an annual turnover of Rs 230 crore in the last financial year, is among the leading players in the Sterile SSP and Sterile Cephalosporins in the domestic market.

The current expansion plan under way would enable the company to increase its presence in the Cephalosporin segment and enter the Non-Antibiotic segment.

The Managing Director Sanjeev Goel told Business Standard that R&D plays a vital role in the pharmaceutical industry so Rs 25 crore has been earmarked for the research and Development. The Company retains about 3% of the total revenue for R&D in the normal course.

He told that India is the most cost effective country for the pharmaceutical production. A large pool of technically qualified people is available at a lower cost, this makes the Indian drugs competitive in the global market,he added.

About one fourth of the total production is exported to the international market. The main export destinations are South America, Far East and Africa.

Goel informed that the new regime has given them an access to the European and US markets and the expansion of the company is being undertaken to cop up this increase in demand.

The existing and proposed expansion would increase the Company's presence in the Cephalosporins segment, enable it to enter into non-antibiotic and formulations segment along with providing the Company with the ability to cater to the regulated markets.

The formulations unit at Baddi is in line with Company's forward integration strategy whereby it would supply the final product, as a one step further value added, to its customers.