Home >companies >Plethico agrees to pay $23 mn to Aurobindo to settle fraud charges
Aurobindo in November became the highest bidder to acquire US-based nutraceutical company Natrol, formerly owned by Plethico group for $132.5 million through a bidding process approved by the US Bankruptcy Court for the District of Delaware.
Aurobindo in November became the highest bidder to acquire US-based nutraceutical company Natrol, formerly owned by Plethico group for $132.5 million through a bidding process approved by the US Bankruptcy Court for the District of Delaware.

Plethico agrees to pay $23 mn to Aurobindo to settle fraud charges

Aurobindo said it has found 'certain discrepancies and non-performance of obligations' by Plethico, subsequently discussions were held for resolution

Hyderabad:

Drug maker Aurobindo Pharma Ltd on Thursday said Plethico Pharmaceuticals Ltd, the Mumbai-based former owner of Natrol Inc., has agreed to pay $23.3 million in cash in addition to certain global intellectual property (IP) rights and other assets to settle financial fraud accusations levelled by Aurobindo’s US subsidiary.

Aurobindo had acquired US-based nutraceutical firm Natrol, formerly owned by Plethico group, for $132.5 million in November through a bidding process approved by the US bankruptcy court for the district of Delaware.

The acquisition included manufacturing assets and personnel and commercial infrastructure, including Natrol’s nutraceutical brands in the US, along with an agreement to take certain liabilities with a bid of $132.5 million.

The Dow Jones Daily Bankruptcy Review reported on Monday that Aurobindo had approached the Delaware bankruptcy court on 6 April alleging that Natrol’s previous owner had perpetrated a $25 million fraud through a fictitious company involving phony email and bank accounts, forged documents and people masquerading as contractors, fooling lenders as well as the bankruptcy court.

Aurobindo said in a filing before exchanges on Thursday that it has found “certain discrepancies and non-performance of obligations by erstwhile owners, Plethico" and that discussions were subsequently held between Natrol and Plethico group to resolve the issue.

Natrol is said to have overall debt of $69 million on its books.

The firm was one of the largest foreign acquisitions made by Aurobindo, in a bid to expand into the nutraceuticals market in the US and other countries. Aurobindo expects Natrol to contribute about 4-5% of sales in 2015-16.

Natrol sells nutritional supplements in the US and other international markets.

Some of Natrol’s branded products are in segments such as weight management, hair and skin care; and health supplements such as vitamins and minerals.

Nutraceuticals—a combination of “nutrition" and “pharmaceutical"—are food derivatives with extra health benefits.

Shares of Aurobindo gained 0.10% to 1,324.50 at the close on BSE, while the benchmark Sensex ended up 0.62% at 28,885.21 points.

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