Infinium Pharmachem coming with an IPO to raise Rs 25.31 crore

Infinium Pharmachem

• Infinium Pharmachem is coming out with an initial public offering (IPO) of 18,75,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 135 per equity share.
• The issue will open for subscription on March 31, 2023 and will close on April 5, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 13.50 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 Vrunda Harishbhai Patel.

Profile of the company

The Company was incorporated with the objective of manufacturing and supplying of various pharma related chemicals, bulk drugs, pharma intermediates etc. Accordingly, the Company is dealing specifically and mainly in manufacturing and supplying of Iodine Derivatives, Pharma Intermediates and Active Pharmaceutical Ingredients (APIs). The Company was formed with a vision to be globally integrated and admired Pharmaceutical & Healthcare Company.

The Company undertakes Contract Research and Manufacturing Services (CRAMS) to provide customized and fully confidential solutions to its clients. Today, the Company’s manufacturing capabilities and technical expertise have efficiently catered numerous industries such as Pharmaceutical & Biotech, Specialty & Performance Chemicals, Agrochemicals, Human Health, Animal Health, Cosmetics, Sanitation, Electrical, Electronics and much more. The Company have auditable manufacturing facility and it has been audited by various well known pharma giants worldwide. The Company currently provides the widest range of Iodine derivatives in the market, with more than 250 intermediates and over 15 APIs. All its products are developed to meet challenging demands, superior quality, performance and various other commercial requirements across industries.

The company has developed and maintained long - term healthy relationships with all its clients, including Pharmaceutical, Biotech and Fine Chemical companies and its products reach out to over 250+ clients globally. The Company formed a Subsidiary Company in the name of Infinium Green Energy Private Limited on June 06th, 2022, The Company also formed a foreign Subsidiary as a Joint Venture (JV) with Shanghai Witofly Chemical Co. Ltd., in the name of Shanghai Tajilin Industrial Co. Ltd., in the People's Republic of China in the year 2019.

Proceed is being used for:

• Marketing and branding expenses (including Registration in Reach - Europe, other marketing expenses)
  
• Repayment of some of existing loans
  
• Expansion of existing unit
  
• Meeting incremental working capital requirements
  
• General corporate purpose
  
• Meeting public issue expenses

Industry overview

The pharmaceutical industry in India is currently valued at $50 billion. India is a major exporter of Pharmaceuticals, with over 200 countries served by Indian pharma exports. India supplies over 50% of Africa’s requirement for generics, 40% of generic demand in the US and 25% of all medicine in the UK. India also accounts for 60% of global vaccine demand, and is a leading supplier of DPT, BCG and Measles vaccines. 70% of WHO’s vaccines (as per the essential Immunization schedule) are sourced from India. Exports of Drugs & Pharmaceuticals values at $2052.78 million in September 2022 and shares 6.29% of the total exports of the month. The Average Index of Industrial Production of Manufacturing of pharmaceuticals, medicinal chemicals and botanical products in the FY 2021-22 is 221.6 and has grown by 1.3%.

Meanwhile, Iodine Market size was valued at $659.5 million in 2022 and is projected to reach $970.5 million by 2030, growing at a CAGR of 4.38% from 2023 to 2030. The iodine deficiency in adults is a major concern across the globe and the increasing prevalence of iodine deficiency is propelling the growth of the Global Iodine Market. The Global Iodine Market report provides a holistic evaluation of the market. The report offers a comprehensive analysis of key segments, trends, drivers, restraints, competitive landscape, and factors that are playing a substantial role in the market. The growth of the Global Iodine Market is indirectly related to the GDP of various countries. Iodine is widely used in human nutrition, biocides, and industrial applications. The regions such as North America, Latin America, and Asia Pacific are producing iodine at huge rates to cater to the needs of the rising population. Over the years, this product will increase and the Iodine Market will grow at an exponential rate. Iodine deficiency in adults is a major concern across the globe and the increasing prevalence of iodine deficiency is propelling the growth of the Global Iodine Market.

Active Pharmaceutical Ingredient (or API) is a crucial segment of the pharma industry, contributing to around 35 per cent of the market. API is the biologically active component of a drug that causes an intended medical effect. According to World Health Organization, API is any substance or combination of substances used in a finished pharmaceutical product (or FPP) intended to furnish pharmacological activity or to otherwise have direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to have an immediate impact in restoring, correcting, or modifying physiological functions in human beings. India is the third largest producer of API accounting for an 8 per cent share of the Global API Industry. 500+ different APIs are manufactured in India, and it contributes 57 per cent of APIs to prequalified list of the WHO. The Indian API market is anticipated to increase at a CAGR of 13.7 per cent during the first four years – about 8 per cent higher than the generic API industry.

Pros and strengths

Wide range of Iodine derivatives: The company currently provides the widest range of Iodine derivatives in the market, with more than 250+ intermediates and 15+ APIs. All its products are developed to meet challenging demands, superior quality, performance and various other commercial requirements across industries.

Expertise in R&D: Expertise of the Company in Research and Development (R&D) (more than 250 Iodine Derivatives Researched & Developed). Most of its customers’ demands are fulfilled by the company which its competitors find challenging to do.

Experienced promoter: The company’s Promoters Sanjaykumar Viththalbhai Patel, Pravin Bhadabhai Madhani and others laid down the foundation of the company in the year 2003 as a Private Limited in the name of “M/s Infinium Pharmachem Private Limited” with a vision to establish itself as a globally integrated & admired Pharmaceutical & Healthcare Company. Later on they converted Private Limited into Public Limited Company in the name and style of “M/s Infinium Pharmachem Limited (Infinium)”. Sanjaykumar Viththalbhai Patel holds a Master Degree from Gujarat University, Ahmedabad, Gujarat, with thorough understanding of Pharmaceutical Industry. He has been on the Board of Directors of the Company since its incorporation and was appointed as Director and currently he holds position of Chairman and Managing Director with effect from October 14, 2022. Pravin Bhadabhai Madhani is a gratuate from Surashtra University, Rajkot, post graduate from M. S. University, Vadodara and L.L.B from Gujarat University, Ahmedabad. He has been on the Board of Directors of the Company since its incorporation. He looks after all the production related activities & regulatory matters of the Company. He has total experience of 20 years.

Risks and concerns

Maximum revenue comes from top 10 customers: The company’s operations are dependent on the requirements of its customers. From its top 10 customers, it generates Rs 4,175.00 lakh, Rs 4,162.48 lakh, Rs 2,975.89 lakh and Rs 2,214.88 lakh of revenue, which is almost 71.74%, 56.22%, 54.55% and 61.46% of the total revenue generated as on September 30, 2022; March 31, 2022; March 31, 2021; March 31, 2020 respectively. The company is an innovation driven enterprise and to produce new products which attracts higher cost. Thus the cost of the new product. is comparatively higher than the usual product. This thus raises the price of the product and thus involves the risk of acceptance by the customer. As a result, number of potential consumer of its product/ services may reduce which will ultimately affect its potential revenue in future to that extent.

Domestic sales dependent on top 5 States: The company’s domestic sales are dependent on the Top 5 States including Telangana, Andhra Pradesh, Gujarat, Maharashtra and Karnataka. It generates almost 91.90%, 87.75%, 92.04% and 93.56% of the Total Domestic Sales generated as on September, 30 2022; March 31, 2022, 2021, 2020 respectively. Its domestic sales are depending on the abovementioned states and in future if any it is not able to sell its products to these state its revenue will impact majorly.

Major portion of export revenue comes from China: The company’s export sales are majorly dependent on the China. It generates almost 72.32%, 44.16%, 65.63% and 21.65% of the Total Export Sales generated as on September 30, 2022, March 31, 2022, 2021, 2020 respectively. Its export sales are depending on the china and in future if the company is not able to sell its products to China its revenue will impact majorly.

Outlook

Infinium Pharmachem manufactures & supplies Iodine Derivatives, APIs, and Iodination reaction-based bulk drugs. The company offers R & D services and commercial scale manufacturing and packaging for Pharmaceutical, Agrochemical, Nutraceutical, Speciality Chemicals & other chemical industries. On the concern side, the company’s top ten customers contribute significantly to its revenue. Any loss of any of its customers may adversely affect its revenues and profitability. Moreover, the company is dependent on few numbers of suppliers for purchase of product. Loss of any of this large suppliers may affect its business operations.

The company is coming out with an IPO of 18,75,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 135 per equity share to mobilize Rs 25.31 crore. On performance front, revenue from operations had increased 40.53% from Rs 7053.07 lakh in Fiscal 2021 to Rs 9911.93 lakh in Fiscal 2022, past few years there has been significant growth in the demand of pharma products due to the pandemic. Furthermore, there has been constant addition of new products, new customers and more sales from existing customers which has led to overall improvement in revenue. Moreover, the company reported a net profit of Rs 668.57 lakh in Fiscal 2022 as compared to a net profit of Rs 272.99 lakh in Fiscal 2021.

Going forward, the Company aims at expanding the business worldwide by offering the widest range of Iodine Derivatives in the world along with the widest customer base from various industries & of diverse industrial applications while keeping sharp focus in Iodine chemistry. The Company is very aggressive in promoting its range of products in domestic & international market through participating in national & international trade fairs & exhibitions, frequent visit to customers, digital marketing & advertisement at relevant platforms. In future, company might narrowly focus to expand its geographical reach in maximum countries by exploring unexplored potential & assured promotional venues.