Dr Reddys Adr Float Under Cloud

Dr Reddy's Laboratories' $200-million American depositary receipts (ADR) issue is likely to be postponed to the first-quarter of next year owing to unfavourable market conditions.

Though the Hyderabad-based pharmaceutical firm has appointed merchant bankers for the proposed issue, the presidential elections in America and the Christmas holidays may force the company to take a cautious approach on the timing of the issue. The company's official spokesperson declined to comment on the exact timing of the issue.

The firm was proposing to part-finance its on-going research and development activities and acquisitions in emerging areas. Dr Reddy's, which had announced its ADR plans in March, was planning to raise the funds by September-end. Merchant banking sources said the company is yet to take any formal decision about the timing of the issue.

Dr Reddy's has roped in DSP Merrill Lynch, ABN Amro Asia Corporate Finance and Credit Lyonnaise as issue managers for the ADR. Among the three, DSP Merrill Lynch is the lead manager, while the other two are the co-managers. The spokesperson confirmed the names of the issue managers.

Meanwhile, the company's scrip closed at Rs 1,390.80 on Wednesday at the Bombay Stock Exchange after opening at Rs 1,375. The share closed on Tuesday at Rs 1,373.

During 1994, DRL had issued 3.5 lakh GDRs at $11.16 per unit, which were listed on the Luxembourg Stock Exchange. The company had raised $47.9 million through the float.

Besides research activities, the proceeds from the ADS will be utilised for acquisitions in India and abroad. The proceeds will also cover biotechnology research, domestic finished dosages, generic markets and expansion into new markets like China, Brazil and regulated markets.

Recently, Dr Reddy's Research Foundation, the research arm of the company, got the Drug Controller General of India's (DGCI) clearance to conduct phase-I clinical trials on its anti-cancer compound (DRF-1042). This is the first molecule from Dr Reddy's to get DGCI clearance.