- November 29, 2022
- Posted by: Santosh Singh
- Category: IPO
Blue Jet Healthcare Limited has filed Draft Red Herring Prospectus with market regulator SEBI on 5th Sep, 2022.
The IPO of Blue Jet Healthcare Limited consists of Offer for Sale (OFS) only. The promoters of the Company will affload up to 21,683,178 Equity Shares.
Business Model of Company
Blue Jet Healthcare Limited is a specialty pharmaceutical and healthcare ingredient and intermediate company, offering niche products targeted toward innovator pharmaceutical companies and multinational generic pharmaceutical companies. Since the incorporation in 1968, the Company has established a contract development and manufacturing organization business model with specialized chemistry capabilities in contrast media intermediates and high-intensity sweeteners, on the back of strategic and early investments in research and development (“R&D”) and manufacturing infrastructure.
The Company has competencies and manufacturing capabilities in contrast media intermediates and high-intensity sweeteners, including saccharin and its salts. The Company manufactures a range of products in-house, including the key starting intermediate and advanced intermediates, which allows it to control its production process for consistent quality and cost effectiveness.
In the past three Financial Years, the Company invoiced a total of more than 350 customers in 35 countries. The Company has built a long-term customer base with innovator pharmaceutical companies and multinational generic pharmaceutical companies, supported by committed multi-year contracts. The company believes its “Collaboration, Development, Manufacturing” approach has been, and will continue to be, critical to its success and a key factor for its business. Its product capabilities across the pharmaceutical and healthcare categories have evolved with customers’ needs, supported by the manufacturing capabilities and technology-driven product development.
Who is the Management of the Company?
As on the date of this Draft Red Herring Prospectus, the following is the management of the company:
(i) Akshay Bansarilal Arora is the Executive Chairman of the Company. He has been on the Board since April 13, 1983. He holds a bachelor’s degree in science from the University of Bombay and a master’s degree in science from St. Xavier’s College, University of Mumbai. He has more than three decades of experience while being associated with the Company.
(ii) Shiven Akshay Arora is the Managing Director of the Company. He has been on the Board since December 8, 2015. He holds a bachelor’s degree in business from Bond University, Gold Coast, Australia. He has more than six years of experience while being associated with the Company and presently in-charge of finance, macro management and strategic matters of the Company.
Why is the company raising funds via IPO?
Each of the Selling Shareholders will be entitled to their respective portion of the proceeds from the Offer for Sale in proportion of the Equity Shares offered by the respective Selling Shareholders as part of the Offer for Sale. The Company will not receive any proceeds from the Offer for Sale.
In addition, the Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges, including among other things, enhancement of Company’s brand name and creation of a public market for the Equity Shares in India.
Is there any OFS in the IPO?
The IPO of Blue Jet Healthcare Limited consists of Offer for Sale (OFS) only. The promoters of the Company will affload up to 21,683,178 Equity Shares. As part of OFS, Promoters Akshay Bansarilal Arora and Shiven Akshay Arora will affload up to 18,366,311 and 3,316,867 Equity Shares respectively.
Financials of the company?
As per the financial statements of the Company, in FY22, the revenue from operations of the Company has increased 37% to Rs. 683 crore as against Rs. 498 crore in the previous financial year ended March 31, 2021. The total expenses of the Company have also increased 44% to Rs. 459 crore compared to Rs. 317 crore in the previous financial year ended March 31, 2021. The Profit Before Tax of the Company increased 32% to Rs. 243 crore as against Rs.184 crore in the previous financial year ended March 31, 2021. The net profit of the Company reported an increase of 34% to Rs. 181 crore as against Rs. 135 crore in the previous financial year ended March 31, 2021.
In FY22, the total assets of the Company increased 33% to Rs. 713 crore as against Rs. 536 crore in the previous financial year ended March 31, 2021. The total equity and liabilities of the Company has also increased 33% to Rs. 713 crore as against Rs. 536 crore in the previous financial year ended March 31, 2021.
In FY22, the net cash generated from operating activities of the Company was Rs. 146 crore as against Rs. 129 crore in the previous financial year ended March 31, 2021. In FY22, the net cash used in investing activities of the Company was Rs. 76 crore as against Rs. 50 crore in the previous financial year ended March 31, 2021. In FY22, the net cash used in financial activities of the Company was Rs. 56 crore as against Rs. 27 crore in the previous financial year ended March 31, 2021. In FY22, the net cash and cash equivalents at the end of the year of the Company was Rs. 75 crore as against Rs. 61 crore in the previous financial year ended March 31, 2021.
Risk in The IPO
The Company is Dependent on a Few Key Customers
The business of the Company is dependent on the sale of its products to a few key customers, including those in Europe and the United States, which are regulated markets. The loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for products of the Company could adversely affect its business, results of operations, financial condition and cash flows.
Interruption or Reduction in the Supply or Transportation of Raw Materials
The Company uses third-party suppliers with whom the Company places purchase orders from time to time for raw materials. A majority of its raw materials are sourced domestically in India, while the Company also engages with approved international raw material vendors across diverse geographical locations. Any delay, interruption or reduction in the supply or transportation of raw materials or an increase in the costs of such raw materials to manufacture the products may adversely affect business, results of operations, financial condition and cash flows.
Company’s Operations Are Concentrated in One State
All of the infrastructure, manufacturing facilities and business operations are currently concentrated in Maharashtra, India. Accordingly, any significant social, political or economic disruption, or natural calamities or civil disruptions in this region, or changes in the policies of the state or local governments of this region or the Government of India, could require the Company to incur significant capital expenditure, change its business structure or strategy, which could have an adverse effect on the business, results of operations and financial condition.
The Company Requires Significant Working Capital Requirements
The business of the Company requires significant working capital including in connection with its manufacturing operations. The actual amount of the future capital requirements may differ from estimates as a result, there may be an adverse effect on the business of the Company, cash flows and results of operations.
The COVID-19 and Such Events
The COVID-19 pandemic has had, and any future pandemic or widespread public health emergency could have, repercussions across global economies and financial markets. The outbreak of COVID-19 in many countries, including India, has significantly and adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets, and it is possible that the outbreak of COVID-19 will cause a prolonged global economic crisis, recession or depression, despite monetary and fiscal interventions by governments and central banks globally. The COVID-19 pandemic, or any future pandemic or widespread public health emergency, could adversely impact the business of the Company, results of operations, financial condition and cash flows.