Vilin Bio Med coming with an IPO to raise Rs 12 crore

Vilin Bio Med

• Vilin Bio Med is coming out with an initial public offering (IPO) of 40,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 30 per equity share.
• The issue will open for subscription on June 16, 2023 and will close on June 21, 2023.
• The shares will be listed on NSE Emerge.
• The share is priced 3.00 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Inventure Merchant Banker Services.
• Compliance Officer for the issue is Saket Kansal.

Profile of the company

The company is engaged in domestic business of manufacturing Pharmaceuticals products and the Manufacturing Unit is located in Roorkee, in the State of Uttarakhand. In order to maintain its competitiveness and to further the cause of Healthcare, the company has laid a R&D Foundation and state of the art Manufacturing Facility in Roorkee. Its Sales Strategy is to sell its products in bulk to Pharmaceuticals Manufacturers, Marketers and Traders, who in turn provide the channel for sales to customers. Its products are primarily used by other pharmaceutical companies and traders, who ultimately will market it to the distributors and retail customers. It do not sell its products under any brand name.

Vilin Bio Med is engaged in the manufacturing of pharmaceuticals formulations such as Oral Liquids, Dry syrups, Sachets, External Preparations, Beta and Non Beta Lactam tablets and Capsules & Nutritional Food supplements. Its Promoters, Mr. Sadhanala Venkata Rao, Mr. Viswa Prasad Sadhanala, Mr. D. Srinivasa Reddy, and Mr. Anuj Bajpai are actively involved in the day-to-day business. Its Promoters are the guiding force behind the Strategic Decisions of the company. Their Industry Knowledge and understanding of the current market situation enables it to improve its geographic horizon and market presence.

Proceed is being used for:

• Augmenting additional working capital requirements
• General corporate purposes

Industry overview

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has the most number of pharmaceutical manufacturing facilities that are in compliance with the US Food and Drug Administration (USFDA) and has 500 API producers that make for around 8% of the worldwide API market.

According to the Indian Economic Survey 2021, the domestic market is expected to grow 3x in the next decade. India’s domestic pharmaceutical market stood at $42 billion in 2021 and is likely to reach $65 billion by 2024 and further expand to reach $120-130 billion by 2030. India's biotechnology industry comprises biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics. The Indian biotechnology industry was valued at $70.2 billion in 2020 and is expected to reach $150 billion by 2025. India’s medical devices market stood at $10.36 billion in FY20. The market is expected to increase at a CAGR of 37% from 2020 to 2025 to reach $50 billion. As of August 2021, CARE Ratings expect India's pharmaceutical business to develop at an annual rate of around 11% over the next two years to reach more than $60 billion in value.

The pharmaceutical industry in India is a significant part of the nation's foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA). Among nations that produce pharmaceuticals, India has long held the top spot. Medicine spending in India is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers, which are on the rise. The Indian Government has taken many steps to reduce costs and bring down healthcare expenses.

Pros and strengths

Experienced management and dedicated employee base: Its Management team has requisite knowledge of the Pharmaceutical Manufacturing Sector to deal, manage the operational issues, Business Strategies and market challenges. Its workforce includes experienced senior executives, many of whom have been associated with it for a long time. It considers that its management team and other key management personnel are well qualified and have requisite industry expertise, and that they have been responsible for its company’s operational growth.

Quality assurance: It focuses in quality manufacturing and aim to deliver qualitative products to the satisfaction of customers. It has an in-house testing laboratory in the manufacturing unit itself, to test its products. Its finished product passes quality checks to ensure compliance with applicable domestic as well as international quality standards. Its in-house testing laboratory regulates and monitors the quality of the products as per the requirements of the customers as well.

Risks and concerns

Dependent on third party transportation service providers: To ensure smooth functioning of its manufacturing operations, it needs to maintain continuous supply and transportation of the raw materials required from the supplier to its manufacturing unit and transportation of its products from its unit to its customers, which may be subject to various uncertainties and risks. It is significantly dependent on third party transportation providers for the delivery of raw materials to it and delivery of its products to its customers. Uncertainties and risks such as transportation strikes or delay in supply of raw materials and products could have an adverse effect on its supplies and deliveries to and from its customers and suppliers. 

Highly competitive market: The pharmaceutical industry in India is competitive with both organized and unorganized markets. However, it 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. 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, 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

Vilin Bio Med is engaged in the manufacturing of pharmaceuticals formulations such as Oral Liquids, Dry syrups, Sachets, External Preparations, Beta and Non Beta Lactam tablets and Capsules & Nutritional Food supplements. On the concern side, the pharmaceutical industry in India is competitive with both organized and unorganized markets. However, it 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. Also, it is dependent on its Promoters, Managing Director and Key Managerial Personnel for setting its strategic direction and managing its businesses.

The company is coming out with an IPO of 40,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 30  per equity share to mobilize Rs 12 crore. On performance front, the company’s revenue from operations for the FY 2022 was Rs 1,121.49 lakh as compared to Rs 1,171.52 lakh during the FY 2021 showing a decrease of 4.27%. This shows the industry stabilizing post covid 2019. As a result, it has since experienced a gradual increase in business in the last quarter of the fiscal 2022. Profit after tax (PAT) decreased from Rs 12.13 lakh for the FY 2021 to Rs 3.35 lakh in FY 2022. The decrease is mainly due to increase in interest cost and other expenses. During FY 2022, the company recorded PAT margin of 0.30% as against 1.03% for FY 2021. 

Going forward, the company’s intend to achieve operational efficiency in terms of cost and production. Its Manufacturing Facilities and process are fully integrated with multi-purpose operational and scale-up abilities. It has adopted manufacturing standards to achieve Standardised Product Quality for all its markets. Quality Control and Quality Assurance are its key focus areas in the Manufacturing Process. Each product is released with consistent high quality to meet the regulatory standards.