New Delhi, Nov 28: The Mumbai-based Glenmark Pharmaceuticals is making its maiden public offer of 26.70 lakh equity shares at a price of Rs 200 per share while its promoters subscribed to about 25 lakh equity shares in a right issues at the face value of Rs 10 less than 6 months ago. Though the equity shares in the rights issue made in July have a lock-in period of three years, the issue was made in a liberal 1:2 ratio. Further, the rights issue was preceded by a bonus issue, which also accrued only to the promoters, in the ratio of 1:2 in October 1998.Glenmark is entering the capital market on December 10 to mop up Rs 53.40 crore from the public. The issue proceeds are proposed to be utilised to set up a soft gel manufacturing facility at Goa with an estimated cost of Rs 19.4 crore. It also proposed to set up a research and development facility at Thane with an estimated cost of Rs 11.3 crore. The company's revenues are overdependent on two brands which constitute close to 34 per cent of the turnover andits success in this competitive environment would largely depend on research and development and the ability to launch new products.
Glenmark's leading brands, Ascoril and Candid-B cream contributed close to Rs 33 crore to the total turnover of Rs 100 crore and another Rs 29 crore coming from other brands like Candid creams and lotions, Candid Vaginal and Altacef.
Exports too have dropped from 1.4 crore in 1997-98 to Rs 14 lakh in 1998-99. The dividend in the past three years has been 50 per cent (1996-97), 40 per cent (1997-98) and 80 per cent (1998-99). But it remains to be seen that whether the company will be able to maintain a high dividend of 80 per cent.
Prior to the public offering, promoters and friends were holding close to 97 per cent stake and post-issue, it would come down to around 72 per cent.Although the company is banking its growth through the proposed soft gel capsule plant in Goa, the facility is expected to commence commercial production only in December 2000. The company is lookingfor the export market and unless it gets the US FDA approvals, which itself is a cumbersome process. The company export market's prior to the US FDA approval will be restricted only to the non-US markets, which can restrict the company's export market.
Glenmark has itself stated that the US market will be altogether a new market. The company feels that after its entry into Portuguese market in the European Union, it will be able to tap the new markets well. Although the company has acquired the land in Goa, it has yet to place orders for supply of equipment, apply for power and water supply for its plant in Goa and R&D centre at Thane.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.