In May Aanjaneya issued an initial public offering (IPO) and is using the funds to expand capabilities. Net profit in the second quarter soared 46 per cent and Aanjaneya is confident its investments will support continued growth.
“We are convinced that taking this growth forward we will be able to achieve our long-term vision of dominating our product categories worldwide”, Kannan Vishwanath, vice chairman and managing director of Aanjaneya, said.
Aanjaneya is making progress with its post-IPO expansions of facilities in Mahad and Pune. At Mahad an intermediates unit has begun pre-commission trials and the structure of an anti-cancer API plant, the biggest single post-IPO investment at Aanjaneya, is complete and machinery has been ordered.
According to a regulatory filing, Aanjaneya will spend more than four-fifths of the funds raised during the IPO on expanding its capabilities in Pune and Mahad. The rest is being used for general corporate purposes and public issue expenses.
IPO scepticism
When Aanjaneya issued its IPO in May MLR Securities recommended investors avoided the offering. Mumbai-based MLR said the valuation was high and raised concerns about client concentration and raw material supply.
MLR said in the first ten months of fiscal 2011 Aanjaneya’s top five clients accounted for 84 per cent of revenues and none were tied to long-term contracts. “Any loss of business from one or more of them may adversely affect the revenues and profitability”, MLR said.
Aanjaneya is also reliant on cinchona bark sourced from Africa for production of its anti-malarial API. “Any shortfall or non-availability of the cinchona bark as well as any fluctuations in its prices would affect the operations and margins of the company”, MLR said.