Saamya Biotech
Saamya Biotech (India) is entering the capital market on 25th September, 2007 with a public issue of 1.50 crore equity shares of Rs.10 each , at par, aggregating Rs.15 crores.
The company is setting up a project to manufacture Bio-Pharma ingredients Daunomycin and Hyaluronic Acid-Pharma Grade and Cosmetic Grade, with project cost of Rs.28.08 crores. This is being financed by equity of Rs.23.08 crores and term loan of Rs.5 crores, being availed from SBI. The products of the company are low volume - high value and due to this, plant installed capacity of Daunomycin would be 225 kg per annum, Hyaluronic Acid (Pharma Grade) would be 125 kg per annum while of Cosmetic Grade it would be 550 kg per annum. The commercial production is expected to start by March 2008. Presently, there are no activities being carried out by the company.
The promoters of the company Dr. Reddy and Mrs. Reddy, both are medicine qualified doctors, who are also promoters of Visu International Ltd. SEBI had imposed a penalty of Rs.50,000 on Visu for violations of SEBI regulations. The financial performance of this company has been nothing great. The paid-up equity of the company is Rs.35.33 crores, in which promoters' stake is just 7%, with book-value of Rs.16.40, on 31-03-07. The share is ruling at Rs.16. EPS of the company for FY 07 was at Rs.4 which is discounted by 4 times. Really, poor discounting to the promoters and company.
Post issue, equity of the company at Rs.23.08 crores would be very high and may be difficult to service. Low promoters' stake of 35% is also a dampener. The share is listing only on BSE.
Considering the size and financing pattern of the project and also track record of the promoters', investment is not advised in this par issue. At Rs.10 also, when other companies are issuing its paper at premium, it is not attractive enough for the investors.