Navana Pharmaceuticals has decided to go for increasing production capacity of the existing facilities with the IPO proceeds, instead of building new manufacturing units, so it can meet the rising demand for its high-end drugs.
Construction of new buildings will take a long time while the opening of letters of credit (LC) for importing new machinery is challenging amid the prevailing dollar crunch, said company secretary Jounul Abedin.
In this context, the board has planned to change the course of IPO fund utilisation upon market assessment.
Mr Abedin said the drug maker had seen a spike in the demand for its drugs in the domestic as well as global market. The board thinks it would be profitable to expand existing facilities to immediately meet the growing demand, he added.
Navana Pharma raised Tk 750 million under the book-building method in September last year to build a general manufacturing building and utility & engineering buildings and for renovation of its cephalosporin unit and partial loan repayment.
As much as Tk 232.4 million, or 31 per cent of the IPO fund, had been allocated for a new general production building.
Now, the company has planned to use the money for modernisation and expansion of the parenteral and ophthalmic facility, general liquid facility with a dispensing area, and for modernisation and expansion of the veterinary unit.
Moreover, it will spend around Tk 23.4 million from its own source to improve the product development and quality control unit.
The remaining IPO fund will be spent as per allocations in the IPO prospectus, with 52 per cent of the proceeds already used up, said the company.
The revised IPO fund utilisation plan is subject to approval of shareholders in its upcoming extraordinary general meeting scheduled for July 31 and of the Bangladesh Securities and Exchange Commission.
Navana Pharma expects a further boost to its profit after the renovation and expansion job.
It posted an impressive 54 per cent year-on-year profit growth to Tk 105 million in the third quarter through March, riding on higher sales revenue.
During the quarter, sales revenue rose 23 per cent year-on-year to Tk 1.50 billion.
In the nine months to March, the company experienced a 16 per cent year-on-year surge in sales revenue to Tk 4.23 billion while profit jumped almost 30 per cent to Tk 249 million during the period.
It produces both human and animal drugs.
The veterinary division of the company manufactures and markets more than 123 high-quality medicines and feed supplements to support poultry, dairy, and aqua farms.
On the other hand, the human health division produces more than 277 drugs - tablets, capsules, oral liquids, ampoules, dry powder vials, powder for suspension, eye drops, creams, ointments, etc.
Navana Pharma sells these products in the domestic market and exports to 15 countries.
Since its debut trading in October last year, investors' appetite for shares of the stock has been remarkable, especially when other good companies, including its peers, have been struggling to get buyers' attention.
The stock peaked at Tk 121.8 from Tk 24 within three weeks after the debut trading.
It still is a lucrative stock, having escalated 65 per cent in the past three months to close at Tk 111.60 on Monday.
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