Navana Pharmaceuticals, a newly listed drug maker, has decided to replace the construction plan of a new general production building, as outlined in its IPO prospectus, with modernisation plans of the existing manufacturing units and their expansions.
To this end, the drug maker’s board of directors recently approved and recommended changing the use of the IPO fund where a major expansion plan was replaced with newly initiated modernisation schemes, as per a disclosure filed with the Dhaka bourse Monday.
The company last year raised Tk 75 crore from the capital market for building a new general manufacturing unit, constructing new utility and engineering buildings, renovating the cephalosporin unit, and partially paying loans.
As per its IPO prospectus, the construction of the new general production building comprises Tk 23 crore or 31 per cent of the total IPO proceeds.
The company in yesterday’s regulatory filing said they decided to replace it with modernisation and expansion of the small volume parenterals and ophthalmics (SVPO) facility, along with similar modernisation and expansion of the general liquid facility with the dispensing area, and modernisation and expansion of the animal health facility.
Besides, the company will modernise product development and quality control for Tk 2.34 crore with its own source.
The balance of the use of proceeds from the IPO remains the same, with 52 per cent of the use of proceeds already completed.
The revision of the IPO fund utilisation is subject to obtaining approval from the shareholders of the company in its upcoming extraordinary general meeting (EGM) scheduled to be held on July 31 and approval from the Bangladesh Securities and Exchange Commission (BSEC), the company said.
The company’s board resolved this after appropriate market assessment, due to the delay in getting products to market after building the entirely new production facility, and to immediately meet the demand for the company’s products, according to the DSE filling.
The drug maker is involved in the manufacturing, marketing, and distribution of generic pharmaceutical finished products under two divisions— the human health division and the veterinary division.
Navana Pharma might also witness a substantial decline in revenue generation from its exports as the company exports around 75 per cent of its outbound products to Sri Lanka only, a country which was currently undergoing economic turmoil, according to an equity report prepared by EBL Securities.
The company reported a 54 per cent year-on-year jump in its net profit during the January to March quarter of the fiscal year 2022-23, thanks to an increase in sales of its expensive drugs.
In the period, the drug maker’s net profit stood at Tk 10.50 crore, which was Tk 6.80 crore in the same quarter of the previous fiscal.
The company’s shareholders approved an 11 per cent cash dividend for the year ended June 30, 2022.
Navana Pharma also decided to raise Tk 150 crore by issuing unsecured, partially convertible, and redeemable bonds through private placement. The proceeds of the bonds will be used to refinance the existing bank loans. The tenure of the bonds will be five years and the coupon rate will be floating and on a semiannual basis.
The bond issuance is subject to the approval of the shareholders and the BSEC. To secure shareholders’ approval, the company will hold an extraordinary general meeting online on July 31.
The company logged a 158 per cent year-on-year rise in its financial expenses in the first nine months of the fiscal year 2021-22. The company registered the staggering rise in expenses mainly due to the soaring amount of short-term loans it borrowed from lenders, EBL Securities said in its equity note.
The company’s short-term debts soared by as much as 144 per cent in the first nine months of fiscal 2021-22, which would likely hammer its profitability in the forthcoming quarters.
As on 31 May 2023, sponsors and directors jointly held 35.49 per cent of the company’s total shares, while institutions owned 13.38 per cent, foreign 27.74 per cent, and the general public 23.39.
The last trading price of each share of the company on the Dhaka bourse was Tk 111.60 on Monday.
