Akums Drugs IPO: 10 key risks investors should know before investing to the issue

Akums Drugs IPO: In light of huge demand from retail and non-institutional investors, Akum Drugs and Pharmaceuticals Ltd.'s initial public offering was fully booked on the first day of bidding. After the issue opened for subscription, the retail section had an overwhelming response within an hour, with other segmentsswiftly following suit. The public subscription period for the initial share sale, which began on July 30, will end on August 1.

Akum Drugs IPO has garnered ₹829 crore from anchor investors a day before its share-sale opening for public subscription. The issue has a price band of ₹646 to ₹679 per share.

In addition to an offer-for-sale (OFS) of 1.73 lakh shares priced at ₹1,177 crore, at the upper end of the price band, by promoters and an existing investor, the company's IPO consists of a fresh issue of equity shares worth ₹680 crore.

Sandeep Jain, Ruby QC Investment Holdings Pte Ltd, and Sanjeev Jain are the ones selling their shares in the OFS. In the public offering, the business has set aside shares valued at ₹15 crore for employees.

The proceeds of the fresh issuance will be utilised for general corporate purposes, debt repayment, the company's working capital needs, and the pursuit of inorganic growth plans through acquisitions.

The issue's book-running lead managers are ICICI Securities, Axis Capital, Citigroup Global Markets India, and Ambit Pvt Ltd.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

Akums Drugs and Pharmaceuticals IPO: Key Risks

• The company is exposed to risks arising from economic, regulatory, political, and other changes in this region, including natural disasters, which could negatively affect their business, operational results, and financial condition. The company's manufacturing units and research and development centres are concentrated in Haridwar, Uttarakhand.
• Their business, operating performance, financial situation, and cash flows might all suffer from any halt or slowdown in their manufacturing and R&D operations.
• The company's raw material supply is sourced from both local and foreign third parties; any disruption, delay, or decrease in this supply might have a negative impact on their operations, financial situation, cash flows, and overall business performance.
• The firm sources the majority of its raw materials domestically, importing the remainder from China and other nations. Their business, financial situation, and operational outcomes might be negatively impacted by any postponement, cessation, or reduction in the availability of these raw resources.
• The capacity of the firm to effectively create and promptly launch new items is critical to its success. If they don't, it may have a negative impact on their operations, financial status, and business.

• The Punjab Pollution Control Board has taken regulatory action against the active pharmaceutical ingredient (API) production plant of its subsidiary, Pure and Cure Healthcare Private Limited, for failing to comply with the terms outlined in the environmental clearances that were obtained.
• The company needs to invest a substantial amount of cash. Lack of capital access might have a negative impact on the company's operations, cash flows, business, and financial health.
• Due to the labour-intensive nature of the company's activities, work stoppages, strikes, and rising employee pay demands might all have a negative impact on the company's operations, financial health, and business operations.
• The company's business, operational performance, financial situation, and cash flows might all suffer as a result of its incapacity to effectively estimate product demand and control inventory.
• Their business, operating performance, financial situation, and cash flows might all suffer from any non-compliance with current and upcoming regulatory obligations, as well as from changes in environmental compliance laws, regulations, and other requirements.

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