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  Astec Lifesciences Ltd.  Prospectus   Snapshot
 
Registered Office Address 5-5A, 4th floor, Kamanwala Chambers, Sir P. M. Road, Fort, Mumbai-400001
Phone 91-22-22618212-13 Fax 91-22-22618289
Email ipo@astecls.com Website http://www.astecls.com
Issue Open 29-Oct-2009 Issue Close 04-Nov-2009
Issue Size 7500000 Issue Type Book Building
Face Value Rs. 10/- Price Range Rs. 77/- to Rs. 82/-
Tick Size Re. 1/- Market Lot 75
Minimum Order Qty 75 Listing Stock Exchange Mumbai, NSE
Registrar To The Issue Bigshare Services Pvt Ltd. Grading -
Book Running Lead Managers Almondz Global Securities Ltd.
Co-Book Running Lead Manager IDBI Capital Market Services Ltd.
 
Analysis

<p><strong>Background</strong></p><ul><li>Astec Lifesciences Ltd. was incorporated as Urshila Traders Pvt Ltd. in January 1994. The name of the company was changed to Astec Chemicals Pvt Ltd. with effect from August 1994 and further changed to Astec Lifesciences Pvt Ltd. in March 2006. The Company was converted into a public ltd company in April 2006.</li><li>The company is chiefly involved in the production of active ingredients and intermediates for agrochemicals and pharmaceutical segment. For 2008-09, over 80% revenue of Astec was derived from the agrochemical business. </li><li>Triazole fungicides are one of Astec&rsquo;s major products in the agrochemical segment whereas Dicap is one of key pharmaceutical intermediate of the company.<strong> </strong></li><li>At present, the company has an installed production capacity of 2,800 MT per annum with the capacity deployment of 92.84%. Both the manufacturing plants of the company are based in Maharashtra.</li><li>Company&rsquo;s exports constitute 29% of sales with South Africa, USA, Europe, West Asia, Japan and South America being the key destinations. </li><li>Astec&rsquo;s major domestic clients include Indofil Chemicals, Krishi Rasayan, Atul Ltd, Syngenta India Ltd, Biostadt India Ltd and United Phosphorous Ltd. Among the major international clients are An Nong Company, Nufarm UK, Irvita Plant Protection, Repar Corporation, Sharda International FZE and Farma Tech International.</li><li>Companies such as Meghmani Organics Ltd, Punjab Chemicals, Rallis, and Nagarjuna Agrichem are some of the main competitors. </li><li>Post issue Promoters &amp; Promoter&rsquo;s group shareholding will reduce to 55.69% from existing 99.99%.</li></ul><p><strong>Objects of Issue </strong></p><ul><li>For the expansion of existing manufacturing facilities at Mahad and Research &amp; Development facility at Dombivli, Maharashtra with an investment of Rs. 32.56 cr and Rs. 2.55 cr respectively. </li></ul><table width="70%" border="0" align="center" cellpadding="2" cellspacing="1" bgcolor="#CCCCCC"><tr><td rowspan="2" valign="bottom" nowrap bgcolor="#FFFFFF"><p><strong>Particulars</strong></p></td><td colspan="3" valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>Proposed</strong></p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>2009-10</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>2010-11</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>2011-12</strong></p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p>Total Installed Capacity for Active &amp; Pharma Ingredients </p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">3,095</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">3,950</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">4,500</p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p>Capacity Utilization (%)</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">85</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">75</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">90</p></td></tr></table><ul><li>To meet product registration expenses.</li></ul><p><strong>IPO Grading / Rating</strong></p><ul><li>CARE has assigned Grade 2 to Astec&rsquo;s IPO. CARE IPO Grade 2 indicates below average fundamentals. CARE assigns IPO grades on a scale of Grade 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.</li></ul><p><strong>Strengths</strong></p><ul><li>OPM of the company has been increasing at a consistent rate from 11.86% in FY 05 to 25.66% in FY 09.</li><li>The RONW has increased from 25.24% in FY 05 to 35.15% in FY 09 because of improvement in PAT at a CAGR of 65.96%.</li></ul><p><strong>Weaknesses</strong></p><ul><li>The company has seen no marked improvement in the inventory turnover ratio. The ratio was at 3.23 times in FY 09. </li><li>Debtors collection period augmented to a 124 days in FY 09 compared to 95 days in FY05. </li><li>Astec depends extensively on Triazole fungicides and Dicap for revenues that together contributed 93.73% of company&rsquo;s total sales in FY 09. </li></ul><p><strong>Financials</strong> </p><ul><li>Net Sales of the company incremented at a CAGR of 41.1% from Rs. 21.10 cr in FY 05 to Rs. 84.41 cr in FY 09 backed by increase in demand and subsequent rise in production. For quarter ended June 30, 2009, net sales stood at Rs. 29.21 cr.</li><li>PAT improved at a CAGR of 65.96% from Rs. 1.41 cr in FY 05 to Rs. 10.72 cr in FY 09. PAT for quarter ended June 2009 was Rs. 3.42 cr. </li><li>For quarter ended June 2009, OPM and NPM of the company were 22.88% and 11.74% respectively. </li><li>Book-value per share of the company stands at Rs 36.01, as on June 30, 2009.</li><li>Debt to equity ratio of the company as on June 30, 2009 stands at 1.19 times.</li><li>EPS of the company as on March 09 is Rs. 11.37 whereas post issue EPS (based on PAT for March 09) stands at Rs. 6.37.</li></ul><p><strong>Valuation</strong></p><ul><li>Company&rsquo;s shares are offered at a price band of Rs. 77 to Rs. 82 per share. Post issue the P/E of the company comes out to 12.15x at the lower price band and 12.94x at the upper price band.</li></ul><strong>Peer</strong> <strong>Analysis (For FY09)</strong><br><br><table width="80%" border="0" align="center" cellpadding="2" cellspacing="1" bgcolor="#CCCCCC"><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p><strong>Company</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>&nbsp;Sales (Rs. cr)</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>PAT (Rs. cr)</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>OPM (%)</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center"><strong>NPM (%)</strong></p></td><td valign="bottom" bgcolor="#FFFFFF"><p align="center"><strong>P/E (Times)</strong></p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p><strong>Bharat Rasayan</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">105.92</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">4.86</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">11.87</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">4.59</p></td><td valign="bottom" bgcolor="#FFFFFF"><p align="center">5.73</p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p><strong>Sabero Organics</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">366.66</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">21.79</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">13.98</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">5.94</p></td><td valign="bottom" bgcolor="#FFFFFF"><p align="center">5.82</p></td></tr><tr><td valign="bottom" nowrap bgcolor="#FFFFFF"><p><strong>Astec Lifesciences</strong></p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">84.41</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">10.72</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">25.66</p></td><td valign="bottom" nowrap bgcolor="#FFFFFF"><p align="center">12.70</p></td><td valign="bottom" bgcolor="#FFFFFF"><p align="center">12.15-12.94</p></td></tr></table>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Source: Asian CREC
   
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