Natco completes $10m FCCB issue

Hyderabad-based Natco Pharma Limited, today said that its issue of foreign currency convertible bonds (FCCBs) aggregating to $10 million with an option to retain over-subscription up to $3.5 million has been completed.

Speaking to Business Standard, M Adinarayana, general manager (corporate affairs), said, "The company plans to use the FCCB issue proceeds to meet the capital costs of expansion projects and expenditure connected with filing of Drug Master Files (DMFs) and Abbreviated New Drug Applications (ANDAs)."

According to him, apart from meeting the capital requirements of the company, part of the proceeds would also be invested in the upgradation and modernisation of the company's plant.

Natco could also benefit with the increase in the US treasury yield curve and may earn good money in returns alone if it does not spend the money raised. A score of Indian companies that had raised money through FCCB route have not utilised it either for acquisitions overseas or on expanding their capacities.

Adinarayana said that the committee of the board of directors empowered to consider the aspects relating to the FCCB issue met today and has allotted 1,350 FCCBs to the subscribers. The offer price per FCCB is $1,000 and would be listed on the Luxembourg Stock Exchange and the Bank on New York would be the trustee for the bonds.

He also said that part of the proceeds of the bond would be invested in the formulation facility of the company. "We want to go in for a United States Food and Drug Administration (USFDA) approval for our formulation plant. We expect the concerned authorities to inspect the plant during the first half of next year," he said.

The company had started the upgradation work on the formulation plant located at Kothur in Mahaboobnagar one year back and the process is expected to be completed in the next six months.

The company's active pharmaceutical ingredients (API) plant at Mekaguda, in Mahaboobnagar district has already received US FDA approval in October.

Natco reported a 10 per cent increase in net profit for the second quarter ended September 30, 2004. Net profit for the quarter was Rs 6.61 crore as against Rs 6.02 crore for the same period last year.

The revenues for the second quarter stood at Rs 46 crore as against Rs 38 crore for the same period last year, representing a 21 per cent increase. For the first half of the financial year, the company's revenues touched Rs 89 crore while net profit for the first six months was Rs 11.56 crore.