IPO Corner: Sudarshan Pharma Industries Ltd.

Sudarshan Pharma Industries (SPIL) is entering into the capital market via SME IPO. It will issue 68,62,400 equity shares of Rs. 10 each via book building process. The company will raise Rs.50.20 crore through this IPO at the upper cap. Price band is Rs.71 – Rs.73 per share. The issue opens on March 09, 2023, and will close on March 14, 2023.

The minimum application to be made is for 1600 shares and in multiples thereafter. Post allotment, shares will be listed on BSE SME. Gretex Corporate Services Ltd. is the sole lead manager and KFin Technologies Ltd. is the registrar to the issue. Gretex group company Gretex Share Broking Pvt. Ltd. is the market maker for the company.

• Issue Opens on: Thursday, March 9, 2023
• Issue Closes on: Tuesday, March 14, 2023
• Issue Type: Book Built Issue IPO
• Price Band: ₹71 to ₹73 per Equity Share
• Face Value: ₹ 10 per equity share
• Lot Size: 1600 Shares
• Issue Size: 6,862,400 shares of Rs 10 (aggregating up to Rs 50.10 Cr)
• Fresh Issue:  6,862,400 shares of Rs 10 (aggregating up to Rs 50.10 Cr)
• Fresh Issue: up to ₹ 50.10 crore
• P/E (X): 13.22
• Retail (Min): ₹ 1,16,800
• Listing on: BSE SME Platform
• Market Maker portion: 344,000 shares
• Market Maker: Gretex Share Broking Pvt. Ltd

Main Objects of the Issue

• Working Capital Requirements
• General Corporate Purposes

Key Business Verticals

• Contract manufacturing supply of Specialty chemicals, Intermediates, APIs, Pharmaceutical Formulation Products and Branded finished formulation
• Imports & Exports of Specialty Chemicals, Intermediates & APIs.

The Company

Sudarshan Pharma Industries Limited (SPIL) is engaged in manufacturing of chemicals and pharmaceuticals. The Company specializes in host of products from rock chemicals intermediates and API to finish formulations and fully integrated pharmaceutical and chemicals. The generic products supplied by the company have a wide application in paint, food, pharma, and adhesive industry. The company is involved in a contract manufacturing facility, supply and outsource of medicines and pharma formulation to hospitals, NGO, government and healthcare institutes. SPIL has 50 pharma formulations which are supplied under the brand name in the form of tablets, ointment, capsules, and injectable.

SPIL has launched a wide product range in pharma formulations such as Setdown, Pulmo relief, Fix Pollen, Flupimac and many more as well as has established goodwill for quality products and has regular clients for the same. It has entered into MOU/ Agreements with Storage Houses /Warehouses facility providers at Bhiwandi, Maharashtra, Wada Palghar, Maharashtra and Baddi, Himachal Pradesh for using their premises for the stock keeping of products.

License for manufacturing Vitamin B6

Sudarshan Pharma Industries Limited is strongly positioned in a rapidly growing Active Pharmaceutical Ingredient industry owing to increasing incidence of chronic disease. It is one of the few Indian player to get licence for manufacturing Vitamin B6 under the PLI Scheme, which would drastically improve its profitability margins and reduce import dependency from China.

The Company is already developing 40+ products of API and Intermediaries and setting up a multi-use manufacturing plant in Maharashtra. So along with the benefits of PLI Scheme the company is eligible to have the incentives provided by Maharashtra government like in power, taxes and other subsidies.

China Plus theory is becoming strong and it will open new avenues.

The Plus Points

1. Sudarshan Pharmaceutical and chemicals (SPIL) has received Licence for Manufacturing Vitamin B6 under the PLI (Production Linked Incentive Scheme) under Atmanirbhar Bharat Project of Government of India, which would drastically improve its profitability margins and reduce import dependency from China.
2. It has double benefit of scheme with incentives of State Government which is 60% of project cost and PLI of Central Government which is approximately Rs18 crore. It will help to achieve break-even of project cost earlier than expected.
3. It is developing 40+products of API and Intermediates and setting up a multi-use manufacturing plant in Maharashtra on its own land of MIDC, MAHAD.
4. It also plans to develop a distributor network & logistic facilities in Mumbai, Delhi, Chennai, Hyderabad and Ahmedabad. This shall also support E-commerce and Online marketing.
5. The company is in the process of applying for 16 formulation registrations in countries like Ghana, Georgia, Myanmar, Nigeria, Kenya, Malaysia & MINA region. The product registrations will boost exports and Pharma business operations.
6. Consistent financial track record, with revenue growing at CAGR of 37% between FY19 and FY22
7. Large pool of business clients comprising of Biocon Limited, Zydus Takeda, Olon India, TEVA Pharma, SRF Limited, L & T Defense, Songwhong, and other Multinational Companies connected to Pharma and Chemicals
8. Experience of 14 years’ service to Chemical & Pharmaceutical industry

Financials

The Company has been consistently performing with superb financial numbers. On financial front, the company has consistent financial track record, with revenue growing at CAGR of 37% between FY19 and FY22. For the last three fiscals, SPIL has posted a turnover/net profit of Rs. 148.00 crore / Rs. 1.28 crore (FY20), Rs. 193.73 crore / Rs. 2.67 crore (FY21), and Rs. 357.56 cr. / Rs. 5.30 crore (FY22). For H1 of FY23 ended on September 30, 2022, it earned a net profit of Rs. 3.61 crore on a turnover of Rs. 195.90 crore.

Marketing & Distribution Network

The company has its own sales force and distribution network in 5 states for ethical marketing of pharmaceutical formulation & products under the brand name in Indian and international markets. It also offers formulation development and QC services and provides customised solutions. It is also engaged in import & export activities, and supply of specialty chemicals, API (Active Pharmaceutical Ingredients), and Intermediates. Based on clients’ specifications and requirements, the company outsources the manufacturing facility from the suppliers in India and abroad. The company has marked its presence in India and International markets. Its products have been exported to the UK, Australia, Uzbekistan, Syria, Oman, Taiwan, and MENA regions.

Major Clientele

Its marquee clients in pharmaceutical formulations and specialty chemicals include Biocon Limited, Zydus Takeda, Olon India, TEVA Pharma, SRF Limited, L&T Defence, Songwon, Intas, Minova, Invision Lifesciences, Omkar Pharma, AstralPipes, DuPont, Reliance, BayerCorp, Akzo Nobel, etc.

The Lead Manager

Its lead manager has a very interesting credential as its IPO success story is mindboggling – like B&B Triplewall Container which came at Rs 36 is trading at Rs 440 and Deep Polymers at Rs 40 is trading at Rs 446.

Promoters

Mr. Hemal Vasantrai Mehta is the Promoter and Managing Director of the company and looks after the overall business operations of the company. His vast industry knowledge and experience has helped company to grow many folds. Leading from the front, he has consistently delivered value to the customers far exceeding their expectations and is involved in day-to-day execution of projects.

Mr. Sachin Vasantrai Mehta is the Promoter and Joint-Managing Director of the company and responsible for providing strategic advice and guidance to the members of the board, to keep them aware of developments within the industry and ensure that the appropriate policies are developed to meet the company’s mission and objectives and to comply with all relevant statutory and other regulations.