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Sun Pharma on Tuesday said a group of independent directors of US arm Caraco has been constituted to evaluate plans to delist the subsidiary, whose continued loss is becoming a cause for concern to the parent firm.
The Mumbai-based firm, which post sales of Rs 1,601.07 crore in the third quarter this fiscal, has also revised its earnings forecast to 42 per cent from an earlier estimate of 35 per cent over sales achieved in 2009-10.
“A community of independent directors of Caraco has been formed for this purpose (for delisting). The committee has retained its own financial and legal advisors to help them evaluate Sun Pharma’s proposal,” Sun Pharma CMD Mr Dilip Shanghvi said in an investor call.
During the third quarter, Sun Pharma has expressed an interest in taking Caraco private, he added.
“From our point of view I think one of the important concerns is the continued period of consistent loss in Caraco,” Mr Shanghvi said.
Caraco reported a net loss of $ 3 million for the third quarter ended December 31, 2010.
At present, Caraco is listed at the New York Stock Exchange and Sun holds 75 per cent stake in it.
Caraco’s problems began in 2008 when unresolved good manufacturing practice(GMP) violations in its Michigan facilities prompted a visit by US officials.
Manufacturing defects led to contamination issues and Caraco was forced to stop manufacturing activities at its sites and hire a consultant to oversee the operations overhaul.
Meanwhile, the company today also revised its 2010-11 sales growth guidance to 42 per cent over the reported sales of 2009-10. Sun had in November 2010 projected a 35 per cent growth for this ongoing fiscal.
The company is also planning to set up its own sales and marketing organisation in the US. The company also said that it has received a favourable ruling in its appeal in eloxatine generic case.
Shares of Sun Pharma were today trading at Rs 431.50 on Bombay Stock Exchange in late afternoon trade, down 2.07 per cent from its previous close.
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