People back a company whose bank balance is strong, Laurus Labs

Sheela Mamidenna

Laurus Labs, a Vijayawada based R&D focussed pharmaceutical firm will launch its Initial Public Offering (IPO) scheduled to open on December 6 and close on December 8, 2016. The company plans to raise through its IPO Rs.1331 crore from the primary market.

The company was incorporated as a private limited company in 2005 and in that very year established its R&D centre at Hyderabad. Beginning in 2007, 2014 and 2015, the company set up 3 manufacturing units in Visakhapatnam, A.P. Laurus launched its first Commercialised four nutritional Fine Chemicals in Europe in 2009.  The company is now in a leadership position in generic active pharmaceuticals ingredients (APIs) for select high-growth therapeutic areas of anti-retrovirals (ARVs) and Hepatitis C.

The company has made significant strides in API and has now made progress in finished formulations, currently having the capacity to manufacture with expansion 5 billion tablets in a year. The company has been graded by most regulatory bodies like USFDA, WHO, NIP Hungary and others. It is backed by marquee investors like Warburg Pincus and FIL Capital Management.

Known for its focus towards R&D, Laurus has 32 patents to its credit and 150 pending patent applications and has launched 59 products since its inception. Its key customers include NATCO Pharma Ltd, Aurobindo Pharma Ltd, Cipla, Aspen Pharmacare and Strides Shasun Ltd among others. The company has bagged numerous awards including the Outstanding Exports Performance Awards by Pharmaexcil and FAPCCI.

Citigroup Global Markets, SBI Capital Markets, Jefferies India and Kotak Mahindra Capital are the BRLMs to the company’s offer. The registrar to the offer is Karvy Computershare Pvt Ltd.

Speaking to the media today, Dr. Satyanarayana Chava, CEO Laurus Labs said the money raised through the shares sold will be used primarily (Rs.50 crores) for building laboratories in Vizag, resting the debt which is nearly Rs 700 crores and for operational expenses.

On the proverbial question regarding the timing of the IPO given the market situation, Vikas Khattar, MD, Jeffries India Pvt Ltd said, “we have been preparing for almost 6-8 months for the IPO, and the market accepts good performing companies, so we are going forward with our philosophy of going ahead and dealing with the changes in the market.”

On demonetization and reaching of targets, Ravi Kumar, Executive Director of Laurus Labs said, “For the past one week the stocks of pharma companies have been performing well while the rest of them have stayed flat or gone down. It is the general psyche of the people to back a company whose bank balance is strong, so demonetization will not have much of an affect.”

Dr Chava on a final note of reassurance said, “rupee depreciation is a cause of concern for pharma exporters, since we import more now and it will be 2 years before we start exporting, we are sure we will not have any issues then.”