RPG Enterprises shelved its plan to sell off its life sciences and pharmaceutical subsidiary RPG Lifesciences, it is learnt. RPG Life manufactures bulk drugs, formulations and biotech products at its facilities in Thane and Ankleshwar.
Earlier the Group had plans to sell off the subsidiary and was in talks with companies like Ranbaxy Labs and Shreya Life Sciences, who had shown interest in buying the company.
RPG officials told Pharmabiz.com that citing a quantum jump in the global generics business the group has made a calculated decision not to sell its pharma venture. "The global generics business witnessed a quantum jump in the last fiscal and the key brands in RPG's formulations business continue to perform well. We are hopeful that the company will build on the turnaround made last year and post good growth in the next 2 years," said company officials.
The company has plans to enter into recombinant products business and has made significant investments in the area. It is also in the process of upgrading its manufacturing facilities on par with the US FDA standards, said officials. It has also filed applications for exporting bulk drugs into US. "The results of these investments are beginning to bear fruit and we should be able to see significant growth in RPG Lifesciences in the coming years," said officials.
Nevertheless, there is also a negative tone to the story. According to industry sources, the reversal in RPG's decision could be due to RPG Life's problems in finding a good buyer. The company's accounts are burdened with liabilities in the form of outstandings.
In the company's annual report for the year ended march 2003 its auditors have specifically mentioned that the company was burdened by huge outstandings, which was not provided in its accounts. If it had provided for these amounts, the company's losses would have been much more than what has been shown in the balance sheet.
The company's total outstandings had crossed Rs. 100 crore from its investments in shares, debentures, loans and advances, and in its subsidiaries.
RPG Life Sciences reported a net loss of Rs. 26.7 crore for the 18 months ended March 2003 compared to a net profit of Rs. 5.6 crore for the corresponding previous period. Its net sales stood at Rs. 179 crore for the 18 months ended March 2003, which was lower by 44 per cent compared to Rs. 318 crore for the previous corresponding period.
RPG manufactures APIs in the areas like anti-inflammatory, cough & cold, prokinetics, systemic antibiotics, other anti-infectives, and agrochemicals at its Thane facility.
The Ankleshwar facility is used to produce formulations, tablets and syrups. The company has also partly hired Hindustan Antibiotics' fermentation facility.