Small cap pharma firm Twilight Litaka is raising $30 million growth capital mostly through a combination of qualified institutional placement (QIP) and global depositary receipts (GDR) but remains open to private investment in public equity (PIPE) deal as well. The Rs 490-crore company will deploy the funds towards its latest acquisition of manufacturing unit at Jejuri near Pune and for other capital expenditure, besides working capital requirements.

"We are looking at closing the fund raising exercise in the next 3-4 months, and looking at the option of QIP and GDR. We have not had any serious talks with private equity but will be open to good proposals, as what we are essentially looking at is growth capital for a company that is targeting five-fold jump in topline in the next 3-4 years," Gopal Ramourti, Managing Director, Twilight Litaka Pharma (TLP), told VCCircle.

TLP shares closed at Rs 107 on BSE, up nearly 2.5% on Friday.

According to a recent HDFC Securities report, Twilight Litaka has outlined an ambitious plan to reach Rs 2,500 crore turnover by FY13, with Rs 1,500 crore coming in from contract manufacturing, Rs 750 crore from domestic formulations and Rs 250 crore from exports, which indicates 61% CAGR.

The company's FY10 turnover topped Rs 490 crore up from Rs 370 crore in the previous fiscal. 

Currently, TLP derives 55% of its revenue from contract manufacturing where it works for big pharma clients like Pfizer, Novartis, Cipla, Lupin and Herba Life, besides a few FMCH names like Loreal. The recent acquisition of a fifth manufacturing plant - Briocia Pharma at Jejuri for Rs 25 crore - brings another pharma giant Abbott as new client.

TLP's branded domestic formulations business brings in 35% where it has a relatively strong presence in the tier-II and hinterland markets with over 60 products across five therapeutic categories - gynaecology, dermatology, cardiology, general physicians and surgeons. The company is also in the midst of a major push into nutraceuticals and dietary food supplements leverging on its manufacturing expertise for protein-based products.

Exports account for the remaining 10% of the current revenue coming in from 40-odd markets in Africa, Central America, CIS and South East Asia.

"We expect the company to perform well in FY11 due to good growth expected from the formulations business and potential upsides from contract manufacturing," the HDFC Securities report noted.

Ramourti, who controls the firm along with RC Bora family, said, he expected EBITDA margins to inch closer to 20% from the current 13% and added that PAT could be around 9-10% moving up from around 7% currently.  "We see significant possibilities to upscale our association with the big pharma in contract manufacturing, while our focus on dietary supplements and nutraceuticals will also buoy margins," he explained.

TLP is issuing 3.5 million warrants on preferential basis at a price of Rs 86 as per SEBI formula to non-promoters with equity capital going up to Rs 10.6 crore to Rs 12.3 crore. This along with the growth capital raising will bring down the promoter holding - of Ramourti and Boras - to around 44% from the current level of 63%.

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