Shasun Chemicals was infused with vigour on Wednesday as reports suggested that the company is near striking an equity deal with CDC Capital for Rs 50 crore.
The prospect of a fresh infusion of funds propelled the scrip of the pharma company higher by 6.85% to Rs 138 by 9:57 IST. Volumes of 2,316 Shasun Chemicals shares were registered on BSE by that time. In 30 sessions between 26 March and 13 May 2003, Shasun Chemicals had risen 67.4% to Rs 129.15 from Rs 77.15.
Reports suggest that the two parties are near striking the deal at Rs 250 per share. This is a near 81% premium to the current market price of Rs 138. The high valuation is based on the belief that Shasun Chemicals is best positioned to scale up as a one-stop-shop in the pharma services sector, carrying out contract research, drug target development, supply of key active pharmaceutical ingredient and clinical trials for MNC pharma companies.
In fact, earlier reports had said that the company had plans to raise Rs 50-55 crore for funding capital expenditure in the current financial year. It also proposes to raise Rs 80-85 crore over the next three years, largely towards financing the enhancement of R&D capabilities and for setting up a formulations plant.
Besides, the company is believed to be looking at bringing in some global MNC pharma players to take up stakes in its equity. Negotiations for this purpose are believed to be in progress.
In January 2003, US drugs major Eli Lilly had certified the Indian drugs company (Shasun) as a preferred supplier for Methothexital and Nizatidine based on the validation lot supplied by the former and approved by the latter. Both parties are exploring possibilities for supply of the two products on a contractual basis. The company had made this clarification after media reports claimed that the two companies (Shasun and Eli Lilly) had already signed the contract for supply of the products.
Late last year, the company's Cuddalore facility was granted US Food and Drug Administration approval for Ranitidine, Nazatidine and an anaesthetic drug. The Cuddalore facility was earlier inspected in 1999. It is the fifth successful audit for Shasun.
The US FDA approval is being considered as major news for Shasun. This will herald the company's entry into US markets with new drugs . Ranitidine, in any case, is a major focus area for the company and the drug's US exposure will bring in huge revenues.
Shasun Chemicals was incorporated in April 1976 and was promoted by S Shankarlal Jain and associates . It is the largest manufacturer of ibuprofen in Asia. Shasun has emerged as a specialised manufacturer of active pharmaceutical ingredients and their intermediates, conforming to USFDA and GMP standards. It is one of the largest producers of Ibuprofen worldwide and a major producer of Ranitidine in India.
For the third quarter ended 31 December 2002, the company registered a 1.65% rise in net profit to Rs 4.32 crore on an 2% increase in net sales to Rs 59.20 crore.
As on 31 March 2003, the promoters' holding in Shasun was 45.54%, while that of the public and institutions was 45.47% and 5.23%, respectively.
