Financial Daily from THE HINDU group of publications
Friday, Aug 29, 2003
Financial Daily from THE HINDU group of publications Friday, Aug 29, 2003 |
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Corporate
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Preferential Allotments US fund invests in Shasun Chemicals Our Bureau
Chennai , Aug. 28 SHASUN Chemicals and Drugs has decided to make a preferential allotment of 9.40 lakh equity shares of Rs 10 each at a price of Rs 244 to the US-based GMO Emerging Markets Fund. Shasun stands to raise Rs 23 crore through the offer. This was decided at an emergency meeting of Shasun's board on August 27. The company would seek the shareholders' approval for the allotment at an extraordinary general meeting (EGM) to be held next month. Shasun's share price at present is around Rs 290. In the event of approval, GMO's equity stake in the company would be 10.7 per cent, and that of the promoters' would come down to 41 per cent from the present level of 46 per cent, said Mr S. Abhaya Kumar, Joint Managing Director. Providing the background to the deal, Mr Kumar said, "Various FIIs had been discussing (investment) with us". The GMO offer came by suddenly, he added. Earlier, Shasun was engaged in a discussion with CDC Capital to place equity, but a deal failed to materialise. Mr Kumar said the company's capital expansion over the next three years would be around Rs 120 crore - a new tablet-making facility; a bulk drug facility and a research centre are on the agenda. In the context of capital requirement, the equity route would lead to a "better cash position" as well as provide new opportunities, said Mr Kumar. Shasun is engaged in the manufacture of bulk drugs such as Ibuprofen and Ranitidine. Most of the company's revenue is derived through exports, and it collaborates with global pharmaceutical companies for select products. GMO's proposed investment follows other significant overseas private equity investments in mid-sized Indian pharmaceutical companies. Last year, CDC Capital invested $ 10 million in Glenmark Pharmaceuticals. Prior to that Schroder Capital Partners took a significant stake in Orchid Chemicals and Strides Arcolab. Industry hands said that Indian pharmaceutical companies are well placed to increase their share in the developed markets. Recently, Mr Arun Jaitley, Commerce and Industry Minister, referred to the industry as an "unsung success story". Shasun Chemicals registered a profit after tax of Rs 16.14 crore on income of Rs 247.28 crore in 2002-03.
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