Sai Parenterals reallocates Rs. 98.8 crore IPO proceeds

Sai Parenterals Limited reallocated Rs. 98.8 crore of initial public offering proceeds into 60% stakes in Saicriti Pharma and Sai Prathyak Laboratories, replacing planned facility upgrades and a new research centre. The revised injectable project is designed for 154.66 million annual units, compared with 105 million units under the original Units I and II upgrade plan.

Why did Sai Parenterals change its IPO spending plan?

Sai Parenterals changed its plan because regulatory and site constraints affected its Jeedimetla Units I and II. Under the Hyderabad Industrial Lands Transformation Policy, units within the Outer Ring Road can convert land and relocate outside it, while upgradations are not allowed. Sai Parenterals says Jeedimetla falls under this policy, prompting the move to a facility outside the Outer Ring Road.

The company also cited the size of the Jeedimetla site. Units I and II cover about 3,100 square yards, against the 12,000 to 13,000 square yards Sai Parenterals says are needed for an injectable plant of the intended European Union Good Manufacturing Practice, or EU-GMP, scale. No adjoining land was available, while Saicriti’s Gummadidala site exceeds 15,000 square yards and was already under construction to EU-GMP and United States Food and Drug Administration standards.

Sai Parenterals originally allocated Rs. 110.8 crore to manufacturing capacity expansion and upgrades, including Unit III expansion and a Unit IV EU-GMP upgrade. It reallocated Rs. 83.8 crore of this amount to Saicriti and retained Rs. 27 crore for the original programme. Unit III is marked completed, while the revised utilisation timeline for the Unit IV upgrade is January 2027.

How did Sai Parenterals reallocate its IPO proceeds?

Sai Parenterals reallocated Rs. 98.8 crore to two majority-stake transactions without changing the Rs. 256.5 crore aggregate amount raised. The board and shareholders approved the variation in the objects of the issue. The proceeds-variation table lists Rs. 83.8 crore for Saicriti, while the transaction presentation describes the investment as Rs. 83.83 crore.

The reallocation did not alter Rs. 14.3 crore for repayment or prepayment of institutional borrowings, Rs. 33 crore for working capital, or Rs. 35.6 crore for bridge and term loans associated with the Noumed Pharmaceuticals acquisition. Of the Rs. 101.8 crore originally earmarked for upgrades and the research centre, Rs. 98.8 crore was applied to the two acquisitions and Rs. 3 crore to general corporate purposes.

What capacity does the Saicriti acquisition add?

Sai Parenterals acquired 60% of Saicriti Pharma, a direct subsidiary constructing a critical-care injectable facility at Gummadidala, with Rs. 83.83 crore of net proceeds. The facility is targeted for July 2027 completion, compared with March 2027 for the original Units I and II upgrade. Management describes the revised timing as about four months later.

The Saicriti facility would provide about 47% more capacity than the 105 million-unit upgrade plan, according to the presentation. It also adds lyophilisation technology and glucagon-like peptide-1 products. Sai Parenterals says its domestic critical-care franchise of about Rs. 52 crore is intended to be manufactured at Saicriti once the facility contributes from financial year 2028.

The estimated total project cost is Rs. 215 crore, compared with about Rs. 105 crore for the foregone Units I and II upgrade. The balance is to be funded by Rs. 55.89 crore of equity from Saicriti’s promoters and Rs. 75.24 crore of project debt with a three-year moratorium and seven-year repayment. Sai Parenterals has agreed to acquire the remaining 40% after three years at 12 times trailing earnings, partly through a Sai Parenterals share swap and with a right of first refusal.

What did Sai Parenterals obtain through Sai Prathyak?

Sai Parenterals acquired 60% of Prathyak Laboratories, now Sai Prathyak Laboratories, for Rs. 15 crore instead of building a research and development centre at Unit IV. The acquisition was completed on 5 October 2026. The proposed greenfield centre would have required recruitment of 20 scientists and was planned to be operationally ready in financial year 2027, whereas Sai Prathyak had operated for three years.

The acquired platform has 28 research scientists, 174 molecules and 285 stock-keeping units across critical care and oncology. Sai Parenterals received manufacturing rights to this portfolio, with technology transfer and manufacturing at Saicriti identified as the plan. Management says Sai Prathyak has no revenue currently but is expected to earn external research and contract research organisation income from financial year 2028.

Sai Parenterals has a right of first refusal over Sai Prathyak’s remaining 40% at the same valuation as its initial 60% acquisition, described as about Rs. 10 crore. The company says the purchase would be funded from internal accruals. For Saicriti, molecules that existed before the acquisition remain with the seller, although they may be transferred to the upcoming Saicriti site for manufacturing and cannot be sold to third parties.

How does the revised structure change Sai Parenterals’ operating plan?

Sai Parenterals says the revised assets are expected to produce about Rs. 110 crore of first-year throughput, compared with about Rs. 50 crore under the original upgrade route. The Saicriti facility is expected to contribute from financial year 2028, including manufacture of the approximately Rs. 52 crore domestic critical-care franchise. The presentation says Sai Prathyak is also expected to generate external research income from that year.

The revised structure shifts future injectable production away from Jeedimetla. Units I and II are to be discontinued once Saicriti is commissioned, while Sai Parenterals will retain both land parcels and evaluate conversion under the Hyderabad Industrial Lands Transformation Policy. The company holds 60% of each acquired business, with the remaining stakes subject to separately disclosed acquisition terms.

Conclusion

Sai Parenterals has retained its stated objective of building regulated-market injectable capacity but changed the execution route from internal upgrades and a new research centre to two 60% acquisitions. The Rs. 98.8 crore reallocation brings a planned 154.66 million-unit injectable facility, lyophilisation and glucagon-like peptide-1 capabilities, and an operating research platform with 28 scientists and 174 molecules.

The next disclosed milestone is Saicriti’s July 2027 completion target, followed by expected financial year 2028 manufacturing contribution and external research income. Sai Parenterals also plans to pursue full ownership on pre-agreed terms: Saicriti’s residual 40% is to be acquired after three years at 12 times trailing earnings, while Sai Prathyak’s residual stake is subject to a right of first refusal at about Rs. 10 crore.