The Hindu Business Line : ‘Delayed disclosure’ on Solrex causes investor concern

Mumbai, April 22 The mysterious antecedents of Solrex have finally been revealed by Ranbaxy, but the truth has left some investors concerned at what they say is a ‘delayed disclosure’.

After months of silence — on whether Solrex is a Ranbaxy group company or promoted as a partnership by Ranbaxy’s promoter-family — on Tuesday, Ranbaxy cleared the air.

It told stock exchanges that Solrex Pharmaceuticals Company (Solrex) is a partnership firm between Solus Pharmaceuticals Ltd and Rexcel Pharmaceuticals Ltd, both wholly owned subsidiaries of Ranbaxy. Solrex now holds 14.7 per cent equity in Chennai’s Orchid Chemicals.

Investors should have been told of the Ranbaxy group’s interest and engagement with Orchid, as it will impact Ranbaxy’s financial statement, said an investor, on conditions of anonymity. As Sorlex picked up equity in Orchid, the latter’s shares shot-up from lows at Rs 140 to peak at Rs 340, he pointed out, solely on the speculation then that Solrex was related to Ranbaxy.

Ranbaxy has in the past maintained “no comment”, in response to queries on the relationship between the company and Solrex. Responding to a query on investor concern, Ranbaxy’s head Mr Malvinder Singh told Business Line that the disclosure was made at the right time. It is a strategic alliance and an investor in the company would understand the benefits, he said.

In an earlier discussion with analysts, he clarified, that Solrex is a 100 per cent Ranbaxy-owned company and the Ranbaxy investment will show in the company’s balance sheet. Allaying concerns over the price at which Orchid shares were got, he said they were “competitive”.

Orchid is the third company (besides Krebs Biochemicals and Jupiter Biosciences) where Ranbaxy has come within striking distance of the 15-per-cent mark that would have triggered an open-offer for Orchid’s shares.

“We felt it was the optimal level,” Mr Singh said, responding to why the number was sacrosanct with the company. However, an expert on the stock market observed that a delayed disclosure on Solrex’s antecedents, especially since it is close to the open-offer limit is a development that could be examined within the framework of takeover norms.

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