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Vivimed Labs plans IPO to fund Rs 26-cr expansion

Our Bureau

Mumbai , July 7

THE Hyderabad-based Vivimed Labs Ltd has embarked on an expansion project to increase its production capacity of triclosan, an anti-microbial non-injestible ingredient used in products such as tooth-paste.

The company also proposes to set up a production facility for four other products — Avis (a ultra-violet ray absorber), Calcium Glycerophosphate (for oral care), Cosvat (an anti-fungal) and A123 (a skincare product). The total project cost for the expansion is an estimated Rs 26.50 crore.

To partially fund this expansion, the company is coming out with an initial public offer (IPO) of 25 lakh equity shares of Rs 70 each to raise Rs 17.5 crore. State Bank of Hyderabad and Citibank would equally fund the remaining Rs 9 crore.

There is a concern over some carcinogenic aspects of triclosan, said Mr Santosh Varalwar, Chairman and Managing Director. However, he added that every batch of the company's product got certification from laboratories in the UK, certifying that it contained the permissible limit of the concern-causing dioxin i.e. less than one part per trillion. In fact, the company has come up with a process that eliminates even this trace of the element, he said.

About 54 per cent of Vivimed's sales for the year ended March 2005, were from triclosan, he said, indicating that there was a dependence on the product. However, he added that the market for triclosan was growing. Also, the company had other products in its pipeline to reduce the dependence, he said.

The estimated Rs 55-crore company supplies triclosan to fast moving consumer goods companies, such as Hindustan Lever Ltd. It supplied about Rs 16 crore worth of triclosan to HLL, the said.

As part of current expansion plans, the production capacity of triclosan would be increased from 480 tonnes per annum to 750 tonnes .

Promoters currently hold about 80 per cent in the company and after the IPO, they will totally hold in excess of 50 per cent equity in the company, Mr Varalwar told Business Line.

The issue opens on July 9. UTI Securities Ltd has been appointed the book running lead managers.

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