Aanjaneya Lifecare Limited

Overview- Company and business

Aanjaneya Lifecare limited was incorporated in 2006. The company is a research based pharmaceutical company with manufacturing and marketing capabilities in APIs (Active Pharmaceutical Ingredients) mainly focus on anti-malarial and (Finished Dosage Forms) FDFs. Company is the largest manufacturers if quinine salts in the world. The company started its manufacturing activities in the year 2007. The company also have a small R&D block in Mahad, Maharashtra. Company have a product portfolio of Anti malarials, Animal Health Product and Anti-cancer. The manufacturing facilities have been approved by various regulatory authorities and are ISO 9001-2008 and WHO GMP certified.

Industry Analysis

World pharmaceuticals industry is growing by leaps and bounds and India is showing the most promising signs in the industry with generics constituting a significant portion of Indian pharmaceuticals industry. The Indian generics business is getting special attention and

respect from all major leading pharmaceuticals companies across the world. The

pharmaceutical industry in India is estimated to be worth about US$ 10 bn, growing at an annual rate of 9%. The global pharmaceutical market grew by 4.8% to reach USD 773 billion in 2008 from USD 715 billion in 2007. The

CAGR for the period 2001-2007 was 10.5%. The two largest markets, the US and Europe

, which contributed almost 72.3% to the global market in 2008, achieved growth rates of 1.4% and 5.8% respectively. The European market is expected to grow with a CAGR of 2-5% for 2008–2013.

 

Objective of the issue

The company aims to raise around Rs 120 crore through the issue of 50 lakh equity shares at higher end of price band of Rs 228-240 a share. The company has decided to utilise Rs. 26.56 crore in for the setting up of the Anti Cancer facility at our existing location in Mahad, which is expected to commence commercial production in April, 2012.

The company has proposed to use Rs. 14.79 crore for the establishment of a cGMP block for manufacturing APIs at our existing location which is expected to commence operations in the September, 2011. The company also propose to use Rs. 8.67 lacs for the establishment of a multipurpose block for manufacturing APIs at our existing location which is expected to commence operations in the April, 2012.

The Research and Development team at, Maharashtra is engaged in improving the processes for existing products thereby improving the cost efficiencies. The company will utilise Rs.19.08 crore for the expansion of our existing R & D centres for lab scale development work.

These are the major money to be utilised after the issue.

 

Risk Factor

There are several risk factor related to the company which must be kept in mind before investing. The company is involved in certain outstanding proceedings which are pending. Any adverse outcome of the above can harm the smooth running of the business.

The Company entered into a Working Capital Consortium Agreement with State Bank of India and The Shamrao Vithal Cooperative Bank Limited whereby raising a term loan of Rs. 115.07 crore. This entails substantial leverage on the part of the company and increases the financial risk of the company considerably.

The company also have the negative cash flow during the year. If they are not able to generate sufficient cash flows, it may adversely affect our business and financial operations.

(IN CRORE)
Particulars 2008 2009 2010
Cash flow for operating activity (2.34) (21.93) 0.48
Cash flow for financing activity (10.69) (2.97) (38.8

 

Ipo Grading

Aanjaneya Lifecare limited grading is done by CRISIL. CRISIL Equities has assigned a CRISIL IPO grade of ‘1/5’ to the proposed IPO. The assigned grade reflects the weaker fundamentals and company’s limited corporate governance practices.

 

Key Financials

(IN CRORE)
Particulars 2008 2009 2010
TOTAL INCOME 22.38 91.15 169.35
TOTAL EXPENDITURE 17.31 80.24 139.56
PAT 2.31 5.1 15.07

 

Overall view

It is not advisable for the subscriber to subscribe for the IPO. The cash flow of the company is negative which is a warning signal. Moreover the company’s financials are not strong. The price of the issue is quite high as compared to the company’s strength. The company have many object and fund allocation plans which seems risky.

Author: Satish Tayal, MBA (ISBM) is an intern with Kredent Group

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2 Responses to “Aanjaneya Lifecare Limited”

  1. The IPO ratings have got a mixed review but the issue seems to be considerably fair for a long term bet

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