ICRA has assigned an IPO Grade 1 to the proposed initial public offering of Saamya Biotech (India) Limited (SBIL). The grading assigned reflects the inherently high-risk associated with execution of Greenfield projects in the emerging biotechnology space.The promoters although qualified in the field of medicine, lack experience in the area of drug manufacture.

The risk factors in executing this project include timely implementation and ability to absorb the fermentation technology in-licensed from abroad. SBIL’s 100% buyback agreement with Finchimica s.r.l., Italy (Finchimica), provides limited comfort considering the current small quantum of trading activities of Finchimica and lack of any price reference in the agreement. The grading is also constrained by the potential volatility in demand and prices of the products going forward in the competitive landscape and the possibility of product substitution due to technological advances. In ICRAs’opinion, the positives associated with this project include SBIL’s strong technology supplier – Biofin and the experience profile of the Directors on the company’s Board.

ICRA assigns IPO gradings on a scale of IPO Grade 5 through IPO Grade 1, with Grade 5 indicating strong fundamenta ls and Grade 1 indicating poor fundamentals. An ICRA IPO Grade is a symbolic representation of ICRA’s current assessment of the fundamentals of the issuer concerned. Such an assessment involves a comparison both with peers and with other listed equity securities.

Saamya Biotech (India) Limited was incorporated in August, 2002 by Dr.Y. Manivardhan Reddy and his wife Dr. Sonia Reddy of the Visu group of companies, to undertake the business of manufacturing and trading chemicals, pharmaceuticals,drugs and intermediates. However,the company did not commence any operations till 2005 when it proposed to set up an USFDA (United States Food and Drugs Administration) approvable Export Oriented Unit for
the manufacture of low volume high value biopharmaceuticals viz., Daunomycin (anti-cancer), Hyaluronic Acid – Pharma Grade (Ophthalmic medicine), Hyaluronic Acid – Cosmetic grade. The company has set up a technically sound Board of Directors and a competent scientific Advisory Council.