Dr Reddy’s to raise Rs 600 cr for capex
Drug major Dr Reddy’s Laboratories is close to raising Rs 600 cr through a preferential allotment of share warrants, reports Suprotip Ghosh.business Updated: Jan 25, 2008 23:24 IST
In a bid to raise funds for possible acquisitions and proposed capital expenditure, drug major Dr Reddy’s Laboratories (DRL) is close to raising Rs 600 crore through a preferential allotment of share warrants. The allotment adds up to 5 per cent of DRL equity.
“The sum to be raised is for unspecified corporate use, but we may use it for capital expenditure and possible acquisitions,” said G.V. Prasad, CEO, DRL.
The decision, subject to shareholder approval, could be cleared by the second quarter of the current financial year, according to industry sources.
The company, in a notice to the Bombay Stock Exchange, said it is raising equity by way of preferential issue of share warrants of up to 5 per cent of the existing equity of the company exercisable into an equal number of equity shares of Rs 5 each to the promoters/promoters' group.
In 2005, DRL had purchased Roche's API business at the state of the art manufacturing plant in Cuernavaca, Mexico for $59 million. DRL moved to Germany in early 2006 and acquired Betapharm Arzneimittel, Germany’s second largest maker of cheap drugs for Rs 2,250 crore. It was the biggest-ever overseas acquisition by an Indian pharma company.
Beginning December 2007, two key products of Simvastatin and Omeprazole have been shipped from India to Germany and the company is making good progress with the transfer of products from its major supplier.
However, growth in the present quarter has been sluggish. After tax profits for the last three months have fallen to Rs 84.7 crore, against Rs 187.9 crore in the same period last year. However, revenues in India (finished dosage) increase by 16 per cent to Rs 200 crore in the last three months from Rs 170 crore in the same period last year.
DRL has attributed this to the impact of several price reforms, increasing rebates to insurance companies and change in the composition of its top products, Prasad said.