Natco Pharma: Manufacturing Affordable Medicines
In 2015, the chief executive officer of Natco Pharma Limited, a commercial manufacturer of pharmaceutical drugs in India, needed to raise funds either through debt or equity to meet the company's capital expenditure and working capital requirements of 3.41 billion. The company could finance a loan at an interest rate of 12 per cent or raise funds through public deposits at an interest rate of 13 per cent. The company could also use equity to raise the requisite funds through either a rights offering or a seasoned equity offering. The chief executive officer needed to present his recommendation to the board of directors the following week. Which option should the company adopt? Maram Srikanth is affiliated with Indian Institute of Management Shillong. Palanisamy Saravanan is affiliated with Central University of Tamil Nadu. Gunta Srinivas is affiliated with Indian Institute of Management Indore.