Navana Pharma to renovate plant instead of setting up new one

Infographic: TBS

Highlights 

• Navana Pharma has reported a 54% year-on-year jump in its net profit during the January to March quarter of the fiscal 2022-23, thanks to an increase in sales of its expensive drugs. 

Navana Pharmaceuticals Limited now wants to renovate its existing production line instead of setting up new facilities with funds raised from the capital market.

To change the utilisation proceeds of the Tk75 crore fund collected through an initial public offering (IPO), the company will now require approval from the shareholders.

It will hold an extraordinary general meeting on 31 July this year for the shareholders' approval.

The drugmaker will then apply to the Bangladesh Securities and Exchange Commission (BSEC) for its consent to this end.

According to the IPO prospectus, Tk23.24 crore was allocated for setting up a new production plant.

But the company now plans to invest Tk25.57 crore for modernisation and expansion of the existing facilities. The rest of the investment will come from its own funds.

In a Dhaka Stock Exchange filing on Monday, Navana Pharma said it has decided to change its IPO utilisation proceeds following an appropriate market assessment.

It further said the company wants to increase its production to meet the growing demand immediately instead of taking time to build a new plant.

Joynul Abedin, company secretary of Navana Pharmaceuticals, told The Business Standard, "Setting up a new factory in the current context is very costly and time consuming. Besides, our existing medicine market is growing. And to meet this growing demand quickly, we will renovate the current production line."

"We wanted to build another factory to bring new products to the market. But in the present situation, it will not be very profitable for us. So, the decision has been changed," he added.

Issuing bond

Last month, Navana Pharma decided to raise Tk150 crore through issuing bond for a maturity period of five years to repay its existing bank loans.

In a price-sensitive information disclosure on the country's premier bourse, the drugmaker said the proposed bond would be partially convertible.

A bond is partially convertible when some of the debt capital is later converted into the company's equity, and the rest of the bond money is paid back to the investors after the maturity period.

The company would also enjoy better cash flow as bond interest would be paid once every six months, while bank loans are paid back in monthly instalments.

As of 31 March this year, Navana Pharmaceuticals had a bank liability of Tk330 crore.

The company has paid back Tk21.18 crore in bank loans out of the capital it collected from investors through an initial public offering last year.

The plan is subject to the approval of shareholders and the regulator.

Financial status

Navana Pharma has reported a 54% year-on-year jump in its net profit during the January to March quarter of the fiscal 2022-23, thanks to an increase in sales of its expensive drugs.

In the January to March quarter of FY23, Navana Pharma's net profit stood at Tk10.50 crore, which was Tk6.80 crore in the same quarter of the previous fiscal year.

Also, its revenue increased by 23% to Tk150.26 crore, from Tk122.48 crore a year ago.

In the first nine months of FY23, the company's revenue increased to Tk423.46 crore, from Tk366.23 crore during the same period of FY22.

And, its net profit increased to Tk24.85 crore, from Tk19.18 crore a year ago.

It had paid an 11% cash dividend to the shareholders for the fiscal 2021-22 and placed it in the A category from N.

Incorporated in 1986 in Bangladesh, Navana Pharma produces both human and animal drugs.

Its shares closed at Tk111.60 each on Monday, which was 70% higher since April, at the DSE.

Its cut-off price was fixed at Tk34 per share through the electronic subscription system under the book-building method.

Qualified and institutional investors, including mutual funds, got 25% of the shares at the cut-off price, whereas individual investors got the remaining shares at Tk23.8 each – a 30% discount on the cut-off price.