Mumbai: The Mumbai-based Khorakiwala family that controls Wockhardt Ltd has revived a Rs400 crore hospital project in Mumbai even as the troubled drug maker remains under pressure from creditors to repay debts.
The 20-storey building of the hospital is already up on land that was leased from the Indian Red Cross Society in Mumbai central.
A family member and trustee of Wockhardt Foundation, which is managing the hospital business of the group, said the facility would be commissioned by early next year.
“It (the project) was stuck for some time now, but we have restarted the work and hoping to open this hospital by early next year,” said the person, who didn’t want to be named.
The Mumbai central hospital was an ambitious project of Wockhardt’s, which had plans to set up four new hospitals and develop six existing facilities across the country.
Rising hopes: The under-construction Wockhardt hospital in Mumbai central which was to be completed by March 2009. Ashesh Shah/Mint
The company was forced to put off an initial public offering (IPO) in early 2008 because of a downturn in the stock markets. Wockhardt had planned the IPO to raise around Rs750-800 crore, mainly to fund the new projects.
The proposed hospital in Mumbai central, named Adams Wylie Hospital, was to be a 340-bed facility and was to be completed by March 2009 at a cost initially estimated at Rs150 crore.
But the projects ran into trouble because of escalating costs and a shortage of funds as Wockhardt battled a financial crisis resulting from debts and foreign exchange losses. Wockhardt Hospital Ltd had to divest 10 of its hospitals to New Delhi-based Fortis Healthcare Ltd for Rs909 crore in August.
The promoter group also divested some of the non-core assets of its listed entity, Wockhardt Ltd, to repay the debts. Wockhardt sold its German pharma business, Esparma GmbH, and two other divisions including the animal health and nutritional businesses.
As of December 2008, the listed company had a total debt of Rs3,400 crore, which included both foreign currency loans and other debts, as well as loans raised from local banks. A significant part of the debt has since been restructured under a corporate debt restructuring (CDR) facility extended by lenders in August last year.
The company remains under pressure from overseas lenders, including foreign banks and a group of investors who had subscribed to the company’s foreign currency convertible bonds (FCCBs).
“Wockhardt has not been able to complete the divestment of its Rs620 crore nutrition business... The company has under the CDR plan restructured its domestic loans to a longer tenure, though the FCCBs and majority of the overseas debts are yet to be resolved,” a person familiar with the CDR package of the company said on condition of anonymity.
Wockhardt sold its nutrition business to US drug and nutritional products maker Abbott Laboratories Inc.