Torrent Pharma to raise $50 m

Company may tap FCCB or GDR route; Plan for Nasdaq listing in the pipeline

Torrent Pharmaceuticals Ltd, the flagship company of the Torrent group, is set to raise funds worth $50 million through foreign currency convertible bonds (FCCB) or global depository receipts (GDR) with a green shoe option of 15 per cent.

Though company officials declined to comment on the plan, industry sources said Torrent Pharma may go for a listing on the Nasdaq.

The board of directors of Torrent Pharma on Saturday approved the company's plan to raise funds through FCCBs and GDRs.

The board also announced the financial results for the half-year ended September 30, 2004.

"The board of Torrent Pharma has plans to raise up to $50 million from the global market via debentures or depository receipts with a green shoe option of up to 15 per cent," a company spokesperson said.

According to a market source, "There were instances like Dr Reddy's Laboratories going for an American depositary receipts issue and subsequently the company got listed on the Nasdaq. An almost similar route is now being adopted by Torrent."

The company had recently undergone a financial restructuring by writing off dues of Gujarat Torrent Biotech and selling its stake in the joint venture with Sanofi. The total foreign shareholding in the company is at 21,88,893 equity shares, which represents 10.34 per cent of the total capital.

"Assessing its present growth rate, the pharmaceutical business of Torrent group is aiming at a turnover of over $250 million in the next five years. The plans for the future are backed by its confidence in the company's growing exports, advancement in research and development, promising breakthroughs in the domestic market and enhancement of its manufacturing abilities," said an industry source.

After the government allowed to raise money through bonds and GDRs in foreign markets, pharmaceutical companies are opting to raise funds, since they get money at a cheaper rate as compared to the domestic market, the source added.

The companies are eyeing external commercial borrowings to support these plans.

"Encouraged by the rupee's resurgence that has reduced currency risk and raised the prospect of huge savings in costs, Indian pharmaceutical firms are lining up to raise cheaper debt overseas. Domestic interest rates, despite a fall in recent months, are still more than three times than in the US. Bankers say most firms are likely to raise foreign loans at a spread of 40-80 basis points over the six-month dollar Libor of around 1.8 per cent," said a market analyst.