What silver lining could investors have possibly spotted? The nutrition business is a prized asset and was being sold in a distress situation, but at a good price. But retaining it could actually benefit Wockhardt as it is a high growth potential business. Another possibility is that Wockhardt may first negotiate terms with its lenders for agreeing to this sale, put it on the block again and maybe get a higher price. With its debt restructuring package progressing, its bargaining power may improve. Or Wockhardt may come up with an entirely new restructuring plan which not only lowers debt but also unlocks value for shareholders.

Graphic: Yogesh Kumar/Mint

While sales growth has been disappointing, profitability has declined, with operating profit margin down by 3 percentage points. It incurred a loss of Rs435 crore in 2009 compared with Rs139 crore a year ago. On the brighter side, its December quarter loss was Rs181 crore, less than half that in the same period a year ago. Lower interest costs, provision for premium on foreign currency convertible bonds and lower mark-to-market losses were the main contributors.

In the US market, Wockhardt got Food and Drug Administration approval for five products in the December quarter and has got two more in the March quarter. With management focus shifting from saving the company to getting back growth, its operating performance may just improve. While that will be a long-term positive to look for, its new game plan to raise cash is what will drive sentiment in the near future.

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