Pharmaceutical company Starwin Products Limited is determined to raise GH¢ 10 million through an Initial Public Offering (IPO), a strategy aimed mainly at expanding the company’s low capital base and improving infrastructure.

In an interview with the B&FT at the company’s Annual General Meeting in Accra, the Managing Director of Starwin, Kwasi Yirenkyi, said the company is one of the most profitable in the Pharmaceutical industry yet profits were too low for the offering of any dividends to shareholders due to its low capital base.

He explained that to remedy the situation the company may either have to resort to banks or its shareholders to inject capital into its operations.

“Generally, profits are in stocks and receivables: stocks, that is, inventory that have not been sold yet. Dividends are cash flow or liquidity, and right now we have cash flow issues,” he said. “We need to go to the bank to borrow money to come and pay the dividends, and I don’t think the shareholders themselves will like that.”

He elaborated on a number of factors accounting for low profits including the introduction of VAT, a pre-financed policy which affects cash flow and the devaluation of the cedi.

“The amount accrued through the IPO will help reduce interest rates, put up additional warehouse space, a second factory building, purchase equipment, machinery and sales vans as well as to grow some working capital,” he said.

Dr. Mensah Otabil, Chairman of the company’s board of directors, in a speech read on his behalf by Michael Addo, a Director of the company, stated that Starwin recorded a growth in revenue from GH¢4,808,858 to GH¢6,678,090, depicting a growth of 39% over 2012. Gross profit for 2013 reached GH¢ 3,804,441, increasing by 48%, compared to the 2012 figure of GH¢ 2,576,052.

“While acknowledging our achievements during the year 2013, we fell short of some key strategic targets, such as the overall cost reduction. We will strive for the efficiency in the execution of our strategic goals,” he assured shareholders.

Justice Awuku-Sao and Samuel Anthony De-Abba were re-elected unanimously as Directors by the company’s shareholders.