QIP funds will be used for capex: Natco Pharma

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QIP funds will be used for capex: Natco Pharma

In an intervies to CNBC-TV18, Bhaskar Narayana, finance director and chief financial officer of Natco Pharma spoke about the latest happenings in his company and the road ahead.

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In an interview to CNBC-TV18, Bhaskar Narayana, finance director and chief financial officer of Natco Pharma spoke about the latest happenings in his company and the road ahead.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Dilip Shanghvi of Sun Pharma has picked up nearly 4% stake in your company. Is it a welcome investment or are you feeling edgy about it?

A: We don't have any reason to feel negative about this investment because this has been done on a personal basis. The shares which Mr Shanghvi bought accounts for about 3% of the share capital, not 4%. Considering the fact that the promoters hold nearly 57-58% of the expanded share capital of the company, there is no reason for any concern for us.

Q: Did you get a chance to speak to him? Is this a start of a bigger role or a bigger shareholding that Mr Shanghvi might want in Natco Pharma? What prompted him to pick up this stake?

A: No, we didn't have any dialogue with him. This question must be asked to him because we can't comment on why he bought the shares and what are his future plans.

Q: Take us through the details of the Rs 67.5 crore QIP that you concluded yesterday. Who were the key buyers?

A: We had opened and closed the issue yesterday. The issue was oversubscribed and we are in the process of allocating the shares. We had a limit of 30 lakh equity shares in the QIP process. It will be a little early to announce the names of the allottees and all.

Q: But you did it at Rs 225 a share and that's a very substantial discount to the price. Did you need to give such a big discount to get it through?

A: The QIP pricing is subject to the SEBI regulations, so the cut-off price of Rs 225 is actually about 5-6% more than what the SEBI determined. The stock went up for a different reason yesterday, but it can't be reckoned because the issue opened on 7th. The 15 days of trading will have to be reckoned backwards from 5th of December.

Q: Why did you need to raise this capital of Rs 67 crore?

A: This capital is to part-finance our expansion plans of the company. We have a major expansion plans going on in all the units. We are building dedicated blocks for certain active pharmaceutical ingredients (APIs) and finished dosage formulations for which we have filed abbreviated new drug application (ANDAs). This is likely to enter into a conclusive face during 2013-15 and on. So we want to be ready with the dedicated block.

Q: What opportunities Natco Pharma has for the Watson deal for Revlimid. How are things progressing and what are your expectations there?

A: As far as revenue is concerned, the product has a USD 3 billion market value. We are the only one to file a Paragraph IV challenge accorded to us. Currently the status is under the mandatory 30 months stay. So things will start moving during the last phase of the stay. We have similar opportunities under four products including the Tamiflu and others.

The Glatiramer Acetate for which we have a Paragraph IV challenge, is entering a concluding phase because the arguments are over and the judgment is expected to be delivered sometime in the first quarter of 2012.

Q: When do you see some upside in revenue from Copaxone or any other opportunities that you mentioned?

A: We expect revenue boost from these ANDAs to come in the last quarter of FY12-13.