Navana Pharma ditches plans for new unit
Navana Pharmaceuticals yesterday decided to use the proceeds from its initial public offering (IPO) to expand and modernise existing facilities rather than establish a new production unit, according to a posting on the Dhaka Stock Exchange (DSE) website.
The newly listed drug company planned to construct a new general production building using Tk 23.24 crore from its IPO proceeds worth Tk 75 crore.
However, Navana Pharma's board of directors instead recommended utilising Tk 13.12 crore of the fund for modernising and expanding its small volume parenteral and ophthalmic (SVPO) facility.
In addition, they suggested setting aside Tk 4.68 crore for expanding the company's general liquid facility by adding a dispensing area.
Navana Pharma will use another Tk 5.44 crore of the IPO proceeds for modernising and expanding its animal health facility.
Besides, the drug maker plans to modernise its overall quality control system by spending Tk 2.34 crore, which will be financed from the company's own source.
The company had planned to construct a new general production building using Tk 23.24 crore from its IPO proceeds
Navana Pharma's board elected to change their initial decision after a market assessment showed that the benefits of upgrading existing facilities outweighed those of establishing a new production unit.
This is because construction would take a considerable amount of time while marketing products of the new unit would be a prolonged process as well.
On the other hand, it was seen that modernising and expanding existing facilities would help immediately meet up the demand for the company's products.
Other than establishing a new general production unit, Navana Pharma had planned to spend Tk 9.7 crore for constructing a new utility and engineering building, according to the IPO prospectus.
Additionally, Tk 17.8 crore was lined up for refurbishing the company's cephalosporin unit and Tk 21.1 crore for repaying loans.
The balance of the IPO proceeds remains the same with 52 per cent having been spent so far.
Navana Pharma has paid-up capital of Tk 107 crore and a reserve of Tk 250 crore, according to DSE data.
Stocks of the drug maker yesterday dropped 2.53 per cent to Tk 111.6 per share.