Achyut Healthcare coming with an IPO to raise upto Rs 3.60 crore

Achyut Healthcare

• Achyut Healthcare is coming out with an initial public offering (IPO) of 1800000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 20 per equity share.
  
• The issue will open for subscription on March 17, 2022 and will close on March 22, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 2 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is GYR Capital Advisors.
  
• Compliance Officer for the issue is Paragkumar Sandipkumar Dave.
  

Profile of the company

The company is engaged in trading of Cenzure, Arpimune, Azathioprine IP, Everomimus, Mycophenolate Mofetil USP, Mycophenolate Sodium USP, Sirolimus, Tacrolimus USP, Infrared thermometer, Ascorbic Acid Coated Vitamin C, Calcium carbonate oyster, Cellulose acetate Phthalate, Chlorthalidone IP, Cross Carmalose Sod IP/USP, DI Basic Calcium Phosphate IP, DI Ethyl Phthlate, Diltiazem Hydrochloride IP, Easy Coat Fc Titanium Dioxide, Escitalopram IP, Escitalopram Oxalate, Favipiravir among many other products.

Since incorporation, it was the company‘s vision and mission has been to remained focused towards the pharmaceutical business of trading and supplying of superior quality products to its customers based on their customizations and requirements, which has enabled it to expand its business operations globally and dive into manufacturing business on its own plants rather than outsourcing and procuring from third parties.

Proceed is being used for:

• Funding purchases of machineries and equipment.
  
• General corporate purposes.
  

Industry overview

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units.India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

India’s drugs and pharmaceuticals exports stood at $24.44 billion in FY21. India is the 12th largest exporter of medical goods in the world. The country’s pharmaceutical sector contributes 6.6% to the total merchandise exports. As of May 2021, India supplied a total of 586.4 lakh COVID-19 vaccines, comprising grants (81.3 lakh), commercial exports (339.7 lakh) and exports under the COVAX platform (165.5 lakh), to 71 countries. Indian drugs are exported to more than 200 countries in the world, with US being the key market. Generic drugs account for 20% of the global export in terms of volume, making the country the largest provider of generic medicines globally. India’s drugs and pharmaceuticals exports stood at $ 3.76 billion between April 2021 and May 2021. The foreign direct investment (FDI) inflow in the Indian drugs and pharmaceuticals sector stood at $18.12 billion between April 2000 and June 2021. The Union Cabinet has given its nod for the amendment of existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100% under the automatic route for manufacturing of medical devices subject to certain conditions. The Indian drugs and pharmaceuticals sector received cumulative FDIs worth $17.99 billion between April 2000 and March 2021.

Pros and strengths

Pan India and global market presence: With the help of the company’s long-standing market presence and the superior quality of its products it has been able to create a pan-India India and International market presence in trading of pharmaceuticals business with the products being traded in different countries namely UAE, Kenya and Nigeria along with all over India catering to various end users, merchants, distributors and exporters. It has been able to cater to the changing and specific need-based requirement of its customers. It has a dedicated team of professionals for managing and overseeing the procurement, marketing, selling and delivering of its products.

Long standing relationship with customers: The company has developed long-term relationships with its customers in pharmaceutical sector. Its business with some of its more recent customers has increased reflecting its ability to develop and strengthen relationships with customers. It attribute the strength of its customer relationships to its ability to supply customised products based on Customer specifications and requirements from qualified and experienced manufacturers, as well as its track record of consistent delivery of quality and cost-effective products and solutions through its strategic alignment with its key customers‘ goals and specifications over the years.

Experienced management team: The company is led by a group of individuals, having a strong background and extensive experience in the excipient and pharmaceutical industry. Its promoter and director are the founding members and are actively involved in the strategic decision making for the Company, pertaining to corporate and administrative affairs, financial operations, expansion activities, business development and management of overall business. It has an experienced and professional management team with strong management and execution capabilities and considerable experience in the pharmaceutical trading industry.

Risks and concerns

Highly dependent on sales and marketing team: The company is highly dependent on its sales and marketing team for its business operations. It intends to continue to enhance the outreach of its integrated business model and the quality of the products it source through the use of targeted marketing and public relations initiatives. In order to maintain and enhance such recognition and reputation, it may be required to invest significant resources towards marketing and brand building exercises, specifically with respect to new products or applications it launch or for geographic markets where it intends to expand its operations. It incurs advertising and marketing expenses to increase brand recall and capture additional demand, and in the event they do not yield their intended results, or it is required to incur additional expenditures than anticipated, its business and results of operations might be adversely affected.

Requires significant amount of working capital: The company’s business requires a significant amount of working capital. In its business, working capital is often required to finance the purchase of pharmaceutical products. Further, it is also required to maintain adequate stocks which requires sufficient working capital. In the event, it is unable to source the required amount of working capital for addressing such demand of the pharmaceutical products or stock adequate quantities of the same, it might not be able to efficiently satisfy the demand of its customers. Even if the company is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its products.

Operate in competitive business environment: The pharmaceutical industry in India is competitive with both organized and unorganized markets. However, the company is required to compete both in the domestic and international markets. It may be unable to compete with the prices and products offered by its competitors (local as well as international). It may have to compete with new players in India and abroad who enter the market and are able to offer competing products. Its competitors may have access to greater financial, manufacturing, research and development, design, marketing, distribution and other resources and more experience in obtaining the relevant regulatory approvals. Increasing competition may result in pricing pressures and decreasing profit margins or loss of market share or failure to improve its market position, any of which could substantially harm its business and results of operations.

Outlook

Incorporated in 1996, Achyut Healthcare is engaged in the trading of Pharmaceutical Products. The company has business operations in both domestic and international markets in the countries namely UAE, Kenya, and Nigeria. The company is located in Ahmedabad, Gujarat. The company involves in the trading of Cenzure, Arpimune, Azathioprine IP, Everomimus, Mycophenolate Mofetil USP, Mycophenolate Sodium USP, Sirolimus, Tacrolimus USP, Infrared thermometer, Ascorbic Acid Coated Vitamin C, Calcium carbonate oyster, Cellulose acetate Phthalate, Chlorthalidone IP, Cross Carmalose Sod IP/USP, DI Basic Calcium Phosphate IP, DI Ethyl Phthlate, Diltiazem Hydrochloride IP, Easy Coat Fc Titanium Dioxide, Escitalopram IP, Escitalopram Oxalate, Favipiravir among many other products. The company has developed long-term relationships with its customers in pharmaceutical sector. Its business with some of its more recent customers has increased reflecting its ability to develop and strengthen relationships with customers. On the concern side, the company’s pharmaceutical products may suffer from certain quality issues due to inadvertent lapses in procurement leading to purchase of low-quality pharmaceutical products. Further the pharmaceutical products may also deteriorate in quality or become decay during transit. Besides, it requires certain statutory and regulatory approvals, licenses, registrations and permissions to operate its manufacturing units, some of which have been granted for a fixed period of time and need to be renewed from time to time.

The company is coming out with a maiden IPO of 1800000 equity shares of Rs 10 each at a fixed price of Rs 20 per equity share to mobilize Rs 3.60 crore. On the performance front, the total income of the company for fiscal year 2021 was Rs 27.43 lakh against Rs 34.56 lakh total income for Fiscal year 2020. A decrease of 20.63% in total income. The sales in fiscal 2020 is from export only while in 2021 it is from domestic sales only. Profit after tax for the Fiscal 2021 was positive at Rs 0.74 lakh against profit after tax of Rs 1.40 lakh in fiscal 2020. There was a decline in profit after tax of Rs 0.66 lakh or 47.14% decrease. The company’s strategic objective is to improve and consolidate its position as one of the leading Pharmaceutical trader in India and abroad with a continuous growth and to enter into the manufacturing business along with the trading. The company foresees an increase in demand and to the tap the growing market, it intends to fully utilize its expertise by holding manufacturing plant at own premises to avoid procuring and outsourcing materials from third parties. It shall also continue to explore opportunities in different regions and countries abroad to enhance its geographical reach.