ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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CIDCO s Seawoods Estate

Core Parenterals CORE PARENTERALS, which has made a big success of its business of manufacture of intravenous fluids, having recorded a 21-fold rise in sales in five years from Rs 2.17 crore 10 Rs 45.37 crore with another 70 per cent leap reported in 1992-93 and an 82 times growth in net profit from Rs II lakh to Rs 9 crore in the same period, is expanding capacity and to finance the proposed expansion it is offering to the public equity shares at a premium pf Rs 140. If the premium is exceptionally high, the company explains its EPS is impressive at Rs 24 as per the financial year ended March 31, 1993. "Based on the EPS for 1992-93 (annualised)". the company declares in its prospectus for the capital issue, "the P/E ratio in relation to the issue price of Rs 150 per share works out to 6.3 times, which is well below the composite P/E ratio for the pharmaceutical industry of 49". The comparison is not exact, since it is the multinational pharmaceutical industry to which it relates. For IV fluid manufacturing companies, the P/E ratio is less than half of that at 20.9 per cent. But the company has made it good and is demanding a price for it from new investors. It is also making a rights issue in fully convertible debentures which it is offering the shareholders for conversion into equity at a premium of not more than Rs 15. The company manufactures IV fluids in both large volume parenterals (20 ml to 1,000 ml range) and small volume parenterals (less than 20 ml) and has an existing capacity of 420 lakh bottles of LVP fluid per annum and 600 lakh bottles of SVP fluid per annum. It is now expanding this capacity respectively to 1,725 lakh bottles and 1,800 bottles. The bulk of the additional LVP capacity will be set up in a new plant at Viramgam in Gujarat, while all of additional SVP capacity will be installed at the existing location at Raj pur village. The company is also setting up a unit to manufacture 672 lakh intravenous sets and variants. The project is appraised by ICICI to cost Rs 161.70 crore. The company is issuing 52.S9 lakh shares of which 24.73 lakh shares it is offering to the public and 21.03 lakh shares to the NRl s. The issue at Rs 140 premium is to net Rs 78.89 crore. Of the balance amount of Rs 82.81 crore of project cost Rs 18.83 crore is being raised by the rights issue of convertible debentures to the shareholders, Rs 34 crore by way of term loans and Rs 29.98 crore as internal accruals. The company has projected for 1993-94 a turnover of Rs 98.66 crore (up 117 per cent over 1992-93) expecting it to go up to Rs 210.57 crore by 1995-%, with post-tax profit to correspond to Rs 25,52 crore (EPS Rs 20) and Rs 64016 crore (EPS Rs 31), respectively. Sushi I Handa, Sunil Handa and B R Handa are the promoters of Core Parenterals. The company's capital issue opens on August 3 under ICICI Securities and Finance Company, IFCI and Bank of Baroda as lead managers.

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