Sigachi Industries zooms 19% as board plans to mull fund raising plan

The board of SIL will meet on January 10, 2023 to consider the proposal of raising funds by way of issue of equity or convertible warrants on preferential basis to the promoters and non-promoters.

Shares of Sigach Industries (SIL) soared 19 per cent to Rs 328 in Friday’s intra-day trade, after the pharmaceutical company announced board meet on January 10, 2023 to mull fund raising via preferential issue.

“The meeting of the board of directors of SIL will be held on Tuesday, the 10th day of January 2023, to consider the proposal of raising funds by way of issue of equity or convertible warrants on preferential basis to promoters and non-promoters, subject to the receipt of necessary approvals/ permissions,” the company said.

At 02:08 PM; SIL traded 17 per cent higher at Rs 320.75, as against 1.02 per cent decline in the S&P BSE Sensex. The average trading volumes on the counter jumped multiple-fold as around 4.05 million shares, which represented 13 per cent of total equity of the company changed hands on the NSE and BSE.

SIL made a stock market debut on November 15, 2021. The company issued shares at issue price of Rs 163 per share. Earlier, the stock had hit a record high of Rs 648 on November 17, 2021, and later touched a record low of Rs 231.30 on June 21, 2022.

SIL is engaged in manufacturing microcrystalline cellulose (MCC), which is widely used in pharmaceutical, food, beverage, cosmetic and paint industry. The most common uses of MCC are in vitamin supplements and tablets. It also acts as a bulking agent in food production. MCC is produced from refined wood pulp, which is imported by the company.

With a view to strategically expand operations and ensure market presence in domestic and international markets, SIL has set up three multi-locational manufacturing units in Jhagadia, Dahej and Hyderabad which helps the company provide timely, efficient and customized delivery of products in terms with the specific demographic needs.

With three units located across Gujarat and Telangana, Sigachi has an aggregate installed capacity of 13,188 million tonnes per annum (MTPA) as on March 31, 2022. The facilities house equipment and systems that comply with the norms of USFDA (United States Food and Drug Association) and WHO-GMP (World Health Organization Good Manufacturing Practice). That apart, the company certifications of HACCP (Hazard Analysis Critical Control Point), ISO 9001:2015, and EDQM (European Directorate for the Quality of Medicines & HealthCare).

The production facility at Dahej- Special Economic Zone, with next door ‘Dahej Port’, gives added advantages in terms of tax benefits, reduced transportation costs and faster turn-around of raw material to finished goods. Dahej unit contributed 41 per cent of total revenue during FY22.

Analysts at CARE Ratings believe that the MCC market size in India is projected to reach $93 million by CY25, registering a CAGR of 13.84 per cent from CY21 to CY25. The growth of the MCC market is primarily triggered by increasing demand for processed food and growing production of pharmaceutical, cosmetics and personal care products. In line with the global trend, pharmaceutical will be major growth segment followed by food & beverages and cosmetic for MCC market in India, said analysts.

"MCC is an important ingredient in the food, pharmaceutical, and cosmetics sectors, as well as to boost MCC’s growth in the pharmaceutical segment, rendering the industry the fastest-growing end-use of MCC. Increasing research and development effort, global investments, and various formulations have positioned the pharmaceutical industry as the top end user of MCC, with newer formulations driving market growth," CARE Ratings added.