The Board of Directors of Nicholas Piramal India Ltd. (NPIL) has approved the merger of Global Bulk Drugs & Fine Chemicals (GBDFC) with NPIL. The merger will be effective from January 1, 2003 and is being effected at a cost of Rs. 52 crore (exclusive of net current assets of Rs. 16 crore), on the basis of a valuation report by M/s Bansi Mehta & Co., chartered accountants.
The merger of GBDFC with NPIL will create an immediate platform to build a strong exports business for NPIL in APIs, intermediates and formulations.
GBDFC's plant near Hyderabad has the rare distinction of being one of the few USFDA plants in India. The unique feature of the GBDFC plant is that is has the USFDA approval for the entire facility (and not merely for a product line) without any deficiency or non-conformity (i.e. without any 483's). The Plant also holds accreditations and approvals from MCA of UK, TGA of Australia, European Drug Authorities, Canadian Drug Authorities, ISO 14000 and 9001. GBDFC's Plant maintains a global standard of quality and its manufacturing facilities are as per cGMP standards. GBDFC's plant manufactures APILs, intermediates and formulations for export to the regulated markets.
NPIL will not issue any equity shares to acquire GBDFC. For the consideration of Rs. 68 crore, NPIL will issue 6 per cent non-convertible preference shares of Rs. 15 crore redeemable in four years, and assume debt of Rs. 53 crore standing in the books of GBDFC. This acquisition will hence not only enhance EPS but will also help improve the RONW. There will not be any significant impact in the debtequity ratio of NPIL due to this acquisition.
This merger entails the creation of a strong platform for NPIL to tap the large export opportunities in the regulated markets. NPIL hopes to achieve an exports turnover of Rs. 100 crore in 2003-04 as against Rs. 7 crore in 2001-02 and Rs. 35 crore expected in 2002-03.
GBDFC has existing relationships with Pharma majors in the regulated markets, including Teva, Andrx Corporation, Ivax and Apotex in the generics segment and Sanofi-Synthelabo and Zambon in the New Drug Delivery (NDD) segment. The company currently exports to the European and Canadian markets and is expected to export to the US later this financial year.