IPO Sales Memo - SMS Pharmaceuticals Limited - Finapolis

Objective of the Public Issue
SMS Pharmaceuticals Limited intends to utilize the proceeds of this public issue for:
(i) Setting up of facilities for manufacturing Active Pharmaceuticals Ingredients (APIs). (ii) Meeting
requirements of additional working capital. (iii) Meeting the expenses of this issue.
IPO Snapshot
Type of issue
100% Book Building Issue
Price
Rs.360 – Rs.380
No. of shares 2,577,000
Issue Size
Rs.92.77 Crore – Rs.97.93
Issue Opening 05, February 2007
Issue Closing 08, February 2007
Face Value
Rs.10
Application Size
15 equity shares and in multiples of 15 equity shares each
Book Running Lead Managers
UTI Securities Limited
Registrar To The Issue
Aarthi Consultants Private Limited
Allotment Basis
Retail Investors
Not less than 901,950 Equity shares
Non-Institutional Investors
Not less than 386,550 Equity Shares
Qualified Institutional Buyers
Not more than 1,288,500 Equity Shares
Disclaimer
Risk Factors
Some of the risk factors that need to be taken into account are: (i) All manufacturing units of company
are based within one geographical area, and hence exposed to the social, natural, economic, risks
localized in this area. (ii) Certain licenses / approvals relating to the issue have either not been received
or not applied for. (iii) Several outstanding litigations if decided against the company could adversely
effect its operations and financials. (iv) More than 45% of the company’s revenue is from sale of a single
product, while a few of the customers account for almost half of its sales. (v) Company’s business is not
covered by any business interruption policy. (vi) Pending utilization of the objects of issue, company
intends to temporarily invest the funds in high quality / dividend bearing liquid instruments. (vii)
Company is subject to restrictive covenants in certain debt facilities provided to its by its lenders. (viii)
Risks associated with group companies in the same line of business. (x) ON January 8, 2007, 400000
equity shares of the company have been placed with Gulf Pharmaceutical Industries at a price little lower
than the floor price of this issue. (xi) Sufficient insurance coverage may not be available for certain
losses that the company may incur. (xi) Company has filed applications for registration of non-infringing
process patents for some of its new products in developed markets. Processing of such applications is a
lengthy process and the outcome is unascertainable. (xii) Some of the external risk factors are terrorist
attacks, civil disturbances, political instability, economic recession, interest rate fluctuations, natural
calamities, adverse change in government policies and regulations, etc.
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