EVOQ Remedies coming with an IPO to raise upto Rs 9.72 crore

EVOQ Remedies

• EVOQ Remedies is coming out with an initial public offering (IPO) of 3600000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 27 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 2.70 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Swastika Investmart.
  
• Compliance Officer for the issue is Tej Bharatkumar Hanj.
  

Profile of the company

The company is one of the recognized trading house of Pharmaceuticals Raw Materials, Excipients, Bulk Drugs at affordable price catering to the customers located in Ahmedabad. It procures the pharmaceuticals Raw Materials products and chemicals from the suppliers which are having WHO-GMP approved production facilities in India and by focusing on its first-class distribution expertise.

In the area of Pharmaceuticals Raw Materials, Excipients, Bulk Drugs etc., the company is specializes in offering quality products and affordable trading in Gujarat. The company has a team of focused industry experts, who have in-depth knowledge of the industry and have with them expertise in offering best solutions for meeting their specific needs. It procure all the products from certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. In order to achieve the task, it keep its regular visit to ensure quality and reliability of the products. Keeping its basic objective in mind, it strive hard to exceed all the expectations of its clients by supplying best quality products at the most reasonable prices. EVOQ is having its registered office, corporate office and storage location facilities located in Ahmedabad. In the healthcare segment, EVOQ being into trading business offers a wide basket of products.

Proceed is being used for:

• Meeting incremental working capital requirements.
  
• General corporate purpose.
  
• Meeting public issue expenses.
  

Industry overview

Growth of Indian pharma industry in 2021-22 (FY22) is estimated at 9-11 per cent, driven by a push from domestic and emerging markets in the next few quarters. The revenue growth for ICRA's sample of 21 Indian pharmaceutical companies was moderate at 6.4 per cent in Q2 FY22, down from 16 per cent in Q1 FY22. Normalisation of the base and pricing pressures in the US market were the major reasons for slowing growth momentum in Q2 FY22, even as growth under domestic and emerging markets remained healthy, the credit rating agency said in a statement. The sample set reported a 15.3 per cent year-on-year (Y-o-Y) growth in domestic revenues, against a 14.6 per cent Y-o-Y growth for the Indian pharmaceutical markets (IPM). A combination of steady normalization in hospital footfalls and field force operations (given the relatively lower restrictions on account of Covid-19), continued traction in acute therapies and better pricing supported healthy revenue growth across companies.

Going forward, sustenance of trend in doctor visits and elective surgeries given the news around the Omicron variant, and performance of new launches in addition to revenue growth momentum in the acute segment will remain key monitorables. As for the US market, the revenue growth for the sample set remained muted at 1.9 per cent during the second quarter owing to high single digit to low teens price erosion and past inventory liquidation given the Covid-related uncertainties. Companies are focusing on specialty products, injectables, complex generics including firstto-file opportunities to improve margins for the US business, which has been impacted by the pricing pressure.

Pros and strengths

Experienced management team: The company benefit from the leadership of its management team, which has extensive experience in pharma industry. Its Chairman cum Managing Director Bhumishth Patel has experience of more than 11 years in pharma industry. It has successfully grown under his efficient leadership. He is actively involved in its operations and guide the company with his vision and experience has been instrumental in sustaining its business operations.

Continue to develop client relationships and Trust: The company plans to grow its business primarily by growing its client relationships and trust. Increased client relationships and trust will add stability to its business. It seeks to build on existing relationships and also focus on building new relationships.

Risks and concerns

Geographical concentration: Although almost entire sales of the company is in the state of Gujarat especially in Ahmedabad region. Such geographical concentration of the company’s business in this region heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in this region which may adversely affect its business prospects, financial conditions and results of operations. It may not be able to leverage its experience in these regions to expand its operations in other parts of India, should it decide to further expand its operations. Further, factors such as competition, culture, regulatory regimes, business practices and customs, customer tastes, behaviour and preferences in the cities where the company may plan to expand its operations may differ from Gujarat, and its experience in the Gujarat may not be applicable to these states.

Require high working capital: The company’s business demands substantial funds towards working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favorable terms, at a future date, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Outlook

EVOQ Remedies specializes in offering quality Pharmaceuticals Raw Material products, Excipients, and Bulk Drugs at an affordable prices. The company procures all the products from WHO-GMP certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. The company has a team of focused industry experts, who have in-depth knowledge of the industry and have with them expertise in offering best solutions for meeting their specific needs. It procure all the products from certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. In order to achieve the task, it keep its regular visit to ensure quality and reliability of the products. On the concern side, the company has not taken any insurance policy for its goods and offices to mitigate risk, lossess or liabilities. Any such uninsured losses or liabilities could result in an adverse effect on its business operations, financial conditions and results of operations. Besides, the company’s business operations require it to obtain and renew from time to time, certain approvals, licenses, registration and permits, some of which may expire and for which it may have to make an application for obtaining the approval or its renewal.

The company is coming out with a maiden IPO of 3600000 equity shares of Rs 10 each at a fixed price of Rs 27 per equity share to mobilize Rs 9.72 crore. On the performance front, the total revenue from operations for the year ended on FY 2020-21 was Rs 1002.48 lakh as compared to Rs 907.21 lakh during the FY 2019-20 showing an increase of 10.50%. Profit after Tax (PAT) increased from Rs 0.03 lakh in the FY 2019-20 to Rs 71.38 lakh in FY 2020-21 showing increase of 237833.33%. The company aims at widening its network so as to enhance its geographical presence and consequently its customer base. It also aims to take the maximum advantage of the location of the company by commencing the sale of API. Besides, the company intends to improve efficiencies to achieve cost reductions and have a competitive edge over its peers and this can be achieved through continuous process improvement, customer service and technology development. It proposes to set up the channel partners/dealers in order to broaden its reach. Greater visibility of its brand would ensure brand retention in the minds of the customers and would in effect further enhance its reach.