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C.R. Sukumar

"The company is exploring the option of raising equity funds through certain select investors, for which purpose it has mandated Cipher Securities.''

Hyderabad , Jan. 21

NATCO Pharma Ltd (NPL), has initiated the process of scouting for a foreign equity partner, who could pump in significant funds into the company.

"The company is looking for sizeable funds to enable it enter the global generics market, apart from further strengthening its market leadership in the domestic oncology segment," sources told Business Line.

According to the sources, the company recently mandated Cipher Securities (India) Pvt. Ltd for the purpose of negotiating with leading international private equity funds to offer a sizeable equity stake in the company.

"The idea is to retire high-cost pedigree debts, meet the funds requirement for setting up an oncology unit at Chennai and upgrade manufacturing facilities to obtain USFDA approvals for an aggressive entry into the global generics market. The funds requirement has been estimated at around Rs 80 to Rs 90 crore," they said.

When contacted, a senior Natco official admitted, "The company is exploring the option of raising equity funds through certain select investors, for which purpose it has mandated Cipher Securities."

In a communication to the stock exchanges, the company, however, said, "Any speculation with respect to percentage stake, amount or nature and names of the parties involved would be extremely premature at this stage."

Having registered a significant turnaround during the last fiscal and wiped out its entire accumulated losses, Natco has been working on financial restructuring.

Aimed at reducing the debt burden and bringing it to acceptable levels in relation to its size, the company has started a series of negotiations with its lenders.

After successfully entering into a one-time settlement of its dues to Industrial Investment Bank of India (IIBI), Industrial Development Bank of India (IDBI) and SBI Home Finance Ltd, the company started working on debt restructuring packages with Canara Bank, State Bank of Travancore and Industrial Finance Corporation of India, the sources said.

At present, the Indian promoters are holding 43.31 per cent and foreign promoters 5.2 per cent in the company's paid-up equity of Rs 17.38 crore.

While the public holds 25.28 per cent and bodies corporate 24.79 per cent, NRIs and OCBs, mutual funds, banks and financial institutions hold the balance.

More Stories on : Mergers & Acquisitions | Pharmaceuticals

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