Granules III

completed

Granules India Limited (“Granules” or “the company”) is a 30-year-old Hyderabad-based pharmaceutical company, with world-class manufacturing facilities for active pharmaceutical ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) and finished dosages (FDs) of a variety of drugs including over-the-counter ones. The company has two API manufacturing facilities, near Hyderabad, in Telangana (Jeedimetla and Bonthapally) and one in Visakhapatnam (or Vizag) (acquired from Auctus Pharma in November 2014); a PFIs and FDs facility in Gagillapur, near Hyderabad, in Telangana; and a research and development (R&D) and manufacturing facility in United States of America (USA).  Additionally, the company has two facilities under its joint ventures (JVs) – in Vizag Special Economic Zone and in Jingmen, China.    To date, IFC has made three investments in Granules:  (a)   Debt and equity investment in 2007 (IFC exited the equity investment in 2014);  (b)   Cleaner Production Lending Facility (CPLF) loan in 2009; and (c)   Debt investment in 2011 for capacity expansion in Gagillapur facility. The proposed investment is IFC’s fourth investment in the company and involves a debt investment of up to US$47.5 million to part-finance Granules’ investment program directed towards setting up new capacity, expanding existing capacities; investing in other general capital expenditure requirement at all existing facilities; and investing in R&D to improve its product mix in favor of higher value-added products. A large part of the investment program is in the form of capital expenditures in India (the “Project”), which is estimated to cost about $84 million. The Project includes building a greenfield API manufacturing facility in Vishakhapatnam, India, expanding existing API and PFI capacities (including constructing a new block in Bonthapally facility), investment in R&D, quality assurance ("QA”), and quality control("QC”)  and additional warehouse capacity .