Mumbai: Drugmaker Alembic Ltd said on 29 June its board approved the demerger of its core pharmaceuticals business into a separate unit, paving the way for the company’s entry into the real estate sector.
Under the proposed restructuring, the company plans to spin off about 70% of its overall business into a new unit named Alembic Pharma Ltd, it said.
“The new unit will have a mirror-share holding pattern as that of Alembic. Hence, the existing shareholders will get a share each in the new company for every one held in Alembic,” R.K. Baheti, chief financial officer, Alembic, told television channel CNBC-TV18.
The demerged unit, Alembic Pharma, would operate the domestic formulations, international generics and active pharmaceutical ingredients (APIs) business and would be listed separately on the stock market, it said in a statement.
Post-demerger, Alembic will hold 29.18% stake in the new entity, it added.
“We wish to become a pure pharma player involved in domestic and international formulations business and research and development activities through the new unit -- Alembic Phamra,” he added.
“The idea is to use the land bank of Alembic to create value unlocking in the real estate sector,” he added.
Alembic has about 100 acres of land near Vadodara in the state of Gujarat, out of which 55 acres is vacant.
“We expect to start real estate operations in the year 2011-12,” he added.
Apart from the real estate operations, Alembic would continue to run its antibiotics business involving penicillin.
“The company’s plans will help it unlock value in the real estate business and there would be more clarity on business plans for both the companies,” Sushant Dalmia, analyst, Angel Broking, told Reuters over the telephone.
However, the restructuring might not help the company deliver better results, Siddhant Khandekar, analyst with Sunidhi Securities & Finance, said.
“Instead of demerging its core pharma business into a separate entity, the company should have demerged its real estate business into a new unit,” he added.
“I do not see this deal in a positive way,” he added.
Shares of Alembic, which rose more than 15% on the demerger announcement, closed at Rs55.12 on Tuesday, up 11.53% in a Mumbai market that ended 1.35% lower.