The Hindu Business Line : Dr Reddy's files prospectus for issue of ADS

The company announced that it has filed a shelf registration statement on Form F-3 with the United States Securities and Exchange Commission relating to a proposed offering of ADSs of up to 13.5 million shares, excluding the underwriter's over-allotment option.

In a press release here, the company said the Form F-3 filed on Monday does not contain any information regarding the terms and conditions of the proposed ADS offering. Further, the company said it would file a prospectus supplement with the US market regulator in due course.

According to sources, the company filed the prospectus supplement with the SEC on Tuesday and also kicked off the road shows for the proposed ADS issue, which is being jointly managed by Merrill Lynch and Citibank.

Though the company did not disclose the exact size of funds to be raised, markets guessed it could be in the range of at least $235 million, taking into consideration the current price of ADS on the New York Stock Exchange at around $17.5 per ADS and the proposed issue size of 13.5-million shares.

However, when contacted, the Dr Reddy's spokesperson told Business Line that the company anticipates pricing to occur over the next few days subject to market conditions. On the deployment of the ADS proceeds, the spokesperson said, "We currently intend to use the net proceeds from the offering under this prospectus for general corporate purposes. These purposes may include geographic expansion, potential acquisitions of, or investments in, companies and technologies that complement our business, capital expenditures for increasing production capacities, addition of new capabilities, additions to our working capital and advances to our investments in our subsidiaries/ joint ventures."

As of November 3, the equity holding of promoters stood at 42.2 million shares, which translates into 27.53 per cent. As per the distribution schedule by March 2006, foreign institutional investors were holding 28.46 per cent stake and NRIs 2.23 per cent, while the American depository receipts constituted 20.13 per cent of the company's total equity.

Indian financial institutions were holding 7.22 per cent, mutual funds 2.19 per cent, while the Indian public and corporate together held 12.19 per cent equity.