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Drugmaker Piramal Healthcare will have the “customary rights” that come with holding 11 per cent equity in Vodafone India, including a board seat, said the Chairman, Mr Ajay Piramal.
The company will appoint Mr Rajesh Laddha, Chief Financial Officer, Piramal Healthcare, to the board of Vodafone India. The running of the company will be with the Vodafone management, he told newspersons, giving details on the weekend announcement made by the two companies — of Piramal Healthcare doubling its stake in Vodafone's Indian arm.
Rationale for investment
Reiterating the company's rationale, Mr Piramal said that upping its stake in the telecom company was a continuation of its philosophy to invest for the short-term, in companies with a good track-record and an India story.
The company expects returns of 17-20 per cent on this investment, he said, justifying the investment and adding that it was the promoters' responsibility to maximise value for the shareholders.
Piramal Healthcare will look to exit this investment in 12-18 months, he said. The exit would be when Vodafone goes in for an initial public offering or through sale to a third company, though Vodafone would have the first right of refusal, he said. Vodafone's stake in the Indian arm now stands at 64 per cent, from the earlier over 69 per cent.
On whether Vodafone's tax-victory against the Government had prompted Piramal Healthcare to double its stake in Vodafone, Mr Piramal told Business Line that on scouting for a good India story to invest in, the telecom sector and Vodafone topped. And temporary ups and downs were part of any business, he said, referring to the scams in the segment.
The Vodafone deal will mean that Piramal Healthcare cannot invest in any other telecom company, he clarified.
Piramal Healthcare was flush with funds after it sold its domestic formulations business for Rs 17,000 crore to Abbott, followed by the sale of its diagnostics business for another Rs 600-odd crore to Super Religare Laboratories — both in 2010.
The healthcare company had about Rs 1,200 crore, a company official said — after forking out 2,500 crore for a buyback of shares, Rs 3,000 crore towards the earlier Vodafone investment and another Rs 3,500 crore towards tax on the businesses it sold.
After the latest Vodafone transaction, the company does not have cash on its books, Mr Piramal said, adding that the deal would require some short-term financing.
Later this year, Piramal Healthcare is set to get another tranche of Rs 2,000 crore from its Abbott deal, he added.
Biz opportunities
On further investments, he said, the company was still looking at different business opportunities, including pharma. Even as it invests in its existing businesses, including products sold over-the-counter and custom-manufacturing, he indicated the company is scouting for opportunities to invest in the US and Europe in new therapies.
Piramal Healthcare shares closed down more than one per cent, at Rs 433, on the BSE, on Monday.
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