Zota Healthcare to use proceeds from April 27 IPO to acquire OTC brands

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Surat-headquartered drug maker Zota Healthcare, which will be selling shares on NSE's Emerge platform as part of its initial public offering (IPO) on April 27, said it will be using proceeds from the offer sale to acquire over-the-counter (OTC) vitamin brands.

NSE’s Emerge is a trading platform for small and medium enterprises.

Zota said it is planning to spend around Rs 10-12 crore on the acquisition of OTC brands, without disclosing the names of the companies with whom it is in talks.

Zota on Thursday announced pricing of its initial public offering of 46,80,000 equity shares with a face value of Rs 10 per share at a price band of Rs 121-125. It plans to raise around Rs 56-58 crore.

The company said it would use a part of proceeds for working capital requirements.

The offer consists of fresh issue of 31,80,000 equity shares and offer for sale of 15,00,000 equity shares.

Pantomath Capital Advisors and Indian Overseas Bank are the lead managers for the proposed issue.

“Our company is going public mainly to raise funds for the company’s expansion plans in the Indian and foreign Markets,” said Himanshu Zota, director of Zota. “Currently in the growth stage, this listing will also add to our branding and increase our acceptability among dealers. While our products are approved by the regulator, the IPO will strengthen customer confidence."

He said that in addition to operational benefits, the IPO will also bring in advantages like tax benefits, talent retention and increased corporate governance.”

Zota, which started operations in 2000, is into formulations including nutraceuticals and ayurvedic offerings.

The company had revenues of Rs 65 crore in FY16, of which exports contributed around 10 per cent.

Zota has a manufacturing facility at Surat SEZ unit, which manufactures only export-oriented products for the Asian and African markets.

THe company derives revenue by selling its products directly to distributors who in turn take forward the supply chain. For domestic markets, the company relies on certain third parties for manufacturing products.

It has 32 product registrations in seven countries and has applied for registration of 171 products in 14 countries. Zota also does some contract manufacturing.

The company has a portfolio across 21 divisions offering products under various therapeutic categories.

Zota has currently applied for patents of 19 unique formulations, from which it has been granted approvals for six formulations.