Wockhardt to separate non-pharma business

Mumbai-based Wockhardt Ltd has announced the demerger of its Rs 120-crore (March 1998) non-pharma business into a separate company effective 1 January 2000. The yet-to-be-formed company will handle all of Wockhardt's non-pharma businesses ranging from nutritional products to parenterals and agro-chemicals. Pharmaceuticals (including hospital products) and veterinary products will remain with Wockhardt. The new company is yet to be named.

The restructuring, as proposed by McKinsey and Co, will leave Wockhardt with 70 per cent of its existing business - or Rs 280 crore -- of the Rs 402-crore turnover recorded in March 1998. Of this, pharma contributes more than 90 per cent while the rest is divided between hospital and veterinary products.

The Rs 120-crore business being transferred to the new company is divided into bio-agro (40 per cent), intravenous fluids (40 per cent) and nutrition (20 per cent). Wockhardt's real estate in Mumbai (at the Bandra-Kurla complex), with a balance sheet value of Rs 140 crore, will be transferred to the new, non-pharmaceutical company. The decision to transfer the parenterals business, being asset-intensive, is meant to curb the negative effect on various profitability ratios.

Merind, which Wockhardt acquired from the Tatas in 1998, and its subsidiary Tata Pharma, will be retained by Wockhardt Ltd as subsidiaries. The company is yet to decide on the fate of real estate at Bhandup, where Merind is located.

Shareholders will get one share in the newly created company for each share they hold in Wockhardt. The shareholding pattern in the new company will be similar to Wockhardt's -- with the promoters (the Khorakiwala family) holding 60 per cent of equity. The new company is likely to be listed on the Bombay Stock Exchange.

Manufacturing facilities at Ankleshwar in (formulations), Aurangabad in (bulk drugs) and Mumbai (vitamin bulk and veterinary) will be retained by Wockhardt while plants at Chandigarh (nutrition), Chennai and Waluj (IV fluids) and Chikalthana (agro) will be transferred to the new company.