Mankind Pharma to sell its OTC business through slump sale to yet-to-be-incorporated subsidiary

Home grown drug-maker and consumer healthcare company, Mankind Pharma – makers of Manforce condoms and pregnancy test kit PregaNews - will carry out a slump sale of its over-the-counter (OTC) business to a yet to be incorporated subsidiary.

The proposed wholly-owned subsidiary, Mankind Consumer Products Pvt Ltd, will be incorporated to carry out “the business of trading and manufacturing of different consumer healthcare products predominantly over-the-counter drugs”. It will have an initial paid-up capital of ₹5 crore. And a further investment of up to ₹250 crore in one or more tranches.

The sale, to be effective on or before October 1 or any other date as may be mutually agreed, will enable the company to grow the OTC business in a “more focused manner”, and allow it to remain “agile in the marketplace” and create a stronger brand recall for the vertical.

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Slump sale is the sale of any undertaking as ‘a going concern’, where the consideration is in lump sum and individual values are not taken into account.

“Slump sale of the OTC business of the company to (a) wholly-owned subsidiary company proposed to be incorporated with the name of Mankind Consumer Products Pvt Ltd or any other name as approved by Ministry of Corporate Affairs.,” it said in a notification.

Mankind Pharma’s key OTC products, including under its Consumer Healthcare vertical, also include the anti-inflammatory and anti-bacterial product AcneStar, the HealthOk multivitamin tablets, the oral contraceptive brand Unwanted and the antacid Gas-O-Fast.

The OTC vertical had a revenue of ₹704 crore, or 8.7 per cent of the company’s reported revenue of ₹8,127 crore in FY23. Net worth (of OTC business) stood at March 31 at ₹155 crore or 2 per cent of Mankind Pharma which stood at ₹7,783.91 crore in FY23.

To Grow OTC vertical

The company was reportedly evaluating its position and business strategy and was exploring various options to grow the OTC business in a more focused manner.

Post a Board meeting, Mankind Pharma informed the bourses that: “The slump sale will enable the Company to remain agile in the marketplace, build wider consumer reach and will create a stronger brand recall for the OTC business.”

Further explaining the rationale, the company said “rationalising its structure will provide opportunities to enhance stakeholders’ value by creating sustainable and quality OTC business.”

“The Company will continue to have business operations with the proposed incorporated entity on arm’s length basis,” it further added.

During the post-results analyst call, held in February, Rajeev Juneja, Vice Chairman and MD of Mankind Pharma said, in the consumer healthcare vertical, the primary sales were muted. But there was healthy growth in the secondary and tertiary sales “resulting in marketing share gain.” The company was on the look out for strategic acquisitions and in-licensing opportunities in the segment.

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