Alpa labs to set up new plant with IPO proceeds

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Alpa Labs is coming up with an IPO of 95 lakh shares, in the price band of Rs 62-68.  Jayesh Patel , CEO of Alpa Laboratories informs that the IPO proceeds will be used for setting up  a new plant.

 

Excerpts from the exclusive interview with Jayesh Patel:

 

Q: What is the purpose of coming out with an IPO at this juncture? You intend to raise about Rs 65 crore, is that right?

 

A: That's correct. The purpose is multifold; we are in the process of setting up a completely new plant about 1 KM further down from our existing plant. But this new plant would be compliant to regulated market requirements.

 

Q: By when will this plant be up and running?

 

A: The complete project should be up and running somewhere around July 2008.

 

Q: If that were indeed the case, would you be able to maintain 40% plus growth as you did from FY06-FY07 going forward?

 

A: The entire plant would be operational by July 2008; but we would be starting separate departments in a phase-wise manner and we could potentially have our first department operational within three months. We have already purchased the land for it and as soon as our IPO is completed we would be starting construction as well as implementation of the plant and machinery.

 

Q: Could you tell us who your biggest clients are at this point of time and our understanding is your top ten clients account for nearly about 50% of your sales, is that correct?

 

A: That is not correct; 2006-2007 my top ten clients accounted for about 16.17% of my sales, 2005-2006 was about 20%. We did have a heavy reliance on contract manufacturing a few years back and we have been gradually changing that; we have tilted the skills in favour of our own products as compared to contract manufacturing, which is visible in our sales growth as well as in our profit growth.

 

Q: Give us an idea of how much does export contribute into your revenues?

 

A: Export contributes about Rs 11 crore out of the total revenue of Rs 101 crore.

 

Q: Rupee has moved about 8-9% appreciating since the start of the year and it has not impacted your margins to a great deal for the results that you have reported?

 

A: No, we have not seen any major changes in our margins for our export products; essentially the changes in the foreign exchange rate do get somewhat dropped in the pricing of the raw material also.

 

Q: Going ahead, the active pharma ingredients that you consume for your production are subject to some amount of fluctuation. Would Alpa Laboratories be able to contain that?

 

A: No, we can't contain the fluctuations in the pricing of the APIs but we do adjust pricing on our own products relative to that and we do have sufficient cushion in there to moderate over the short-term fluctuations.

 

Q: Which are your biggest export markets of this Rs 11 crore that you export?

 

A: My biggest export market would be Nigeria at this point of time. But we do export to lot of other countries, which include as close as Sri Lanka to as far away as Costa Rica and Puerto Rico.