Granules' tableting plant may add Rs 70-80 cr to FY08 rev

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IFC has picked up nearly 12% stake in Granules India for Rs 60 crore. The move comes after it made preferential allotments to ISP Investo and Ridgeback Capital. But C Krishna Prasad, Managing Director of Granules India , clarifies that the money that IFC has put in currently was not Rs 60 crore, but just USD 6 million, which should be around Rs 24 crore.

He further said that the tableting plants would be completed by end of June and expects to start commercial production by August. In 2008. The company is looking at about Rs 70-80 crore of revenues via the tableting plant, which will have a capacity of about six billion tablets per annum in the first year, which they expect to take to about 12 billion tablets in in the second year.

Excerpts from CNBC-TV18's exclusive interview with C Krishna Prasad:

Q: How much money have you currently raised via preferential allotments to IFC, Ridgeback and ISP Investo? What are you going to do with it?

A: Our total requirement plan was about USD 25 million, of which, USD 5 million was raised from Ridgeback, while USD 5 million was via ISP. Right now, IFC has not put in Rs 60 crore, but just USD 6 million, which should be around Rs 24 crore. We are also planning to raise the rest of the requirement - about USD 9 million - by way of term loan. We are discussing with IFC and are looking at a long-term term loan.

Q: Any further equity dilutions?

A: No, this is the final dilution that we are doing and this puts to close anything else in the near future.

Q: When are your new tablet plants coming up and how many are you setting up?

A: The tableting plants will be completed by end of June and we expect to start commercial production by August.

Q: What is the capacity of this plant and at full utilization how much will it add in terms of revenues to Granules in 2008?

A: In 2008, we are looking at about Rs 70-80 crore of revenues from the tableting plant, which will have a capacity of about six billion tablets per annum in the first year, which we expect to take to about 12 billion tablets in in the second year; we expect to utilize at least 80-85% of the capacity in the first and second year.

Q: Where are you using the rest of the money, part of it is going into the tablet plant: what is the remaining expansion plan and how much of it is in China?

A: Its for the tableting plant and for the acquisition in China, China is close to about USD 5 million and it is also part of the expansion of the APIs that we have completed and a little bit expansion going on in the APIs.

Q: Are you expecting to be hit at all by the dollar fall that we have seen over the past month?

A: We are hit to some extent but overall not as badly as one would think because about 50-60% of our raw materials are also imported and that directly gets translated into that and we are also negotiating with our customers for increases in sales prices.