The Bombay Stock Exchange (BSE) authorities have suspended major companies from pharmaceutical segment like Elder Pharmaceuticals, Surya Pharmaceuticals, Plethico Pharmaceuticals, Twilight Litaka, Dr Datson Laboratories (formerly known as Aanjaneya Lifecare), Arvind Remedies, Ankur Drugs and Hiran Orgachem from trading during last couple of years. The list of delisted companies includes few relatively small companies like Elder Health, Elder Project, Life Line Drugs & Pharma, Combat Drugs, Toheal Pharmachem, Venkat Pharma, Anus Laboratories, KDL Biotec, Citurgia Biochemicals, Jupiter Bioscience, etc. Several scrips are currently quoted below par without any trading as these were delisted by authorities. This list is likely to increase in due course if the authorities will not take stringent action against management of these players.

Though the overall financial performance of Indian pharmaceutical companies improved during last five years, few majors lost ground heavily and put pressure on market capitalisation of pharma companies. The poor performance attributed to the stringent actions taken by foreign regulators regarding quality issues, borrowings, stiff competition and also government policies in respect of capping of drug prices. Further, financial mismanagement, lack of timely actions, fund shortages for improvements, lower than expected returns from research activities and rosy picture at the time of entry into capital market knock down several pharma majors.

Over the years, investors lost heavily and stock exchange authorities failed to take any action against culprits, except de-listing. The regulators only suspended these loss making companies from trading and several crores were locked in. Investors as well as financial institutions and banks suffered heavily. While suspending from trading, the only reason given is 'Due to Penal Reasons' on BSE. The stock exchange authorities and even market regulator SEBI are not taking any serious action to solve the problem and take actions against management of these lost entities.

Several of these companies incurred heavy losses due to interest burden and are now going under debt restructuring process. From the small investors point, the loss is heavy, and for financial institutions, banks, corporate bodies and foreign institutional investors, they are passing through challenging situation. The shareholding pattern of many companies is interesting and promoters are holding very small part in these companies. For instances, Surya Pharma' promoters are holding only 0.96 per cent of its equity capital, and that of Twilight Litaka's promoters have only 1.28 per cent. The promoters of Dr Datsons, Ankur Drugs, Hiran Orgochem, Elder Pharmaceuticals are holding 10 per cent, 5.90 per cent, 23.88 per cent, 25.34 per cent respectively. Thus, the delisting will not affect to promoters as compare to public investors.

The focus on de-growth of net sales of these companies will show how these companies lost ground and several of them were delisted. Five years ago i.e. in the year 2011-12, Plethico Pharma registered a net sales of Rs.1,640 crore, Surya Pharmaceuticals Rs.1,637 crore, Elder Pharma Rs.1,324 crore, Twilight Litaka Pharma Rs.730 crore, Dr Datson Rs.450 crore, Arvind Remedies Rs.465 crore, Ankur Drugs and Pharma Rs.153 crore and Hiran Orgochem Rs.148 crore. All these major companies lost heavily and delisted from Bombay Stock Exchange and National Stock Exchange for various reasons. Who are the main losers? The answer is small investors, banks, corporate bodies and financial institutions.

Out of these several companies did not declare their latest financial working for the year 2015-16. We have taken latest available figures for comparison purpose. Surya Pharmaceuticals sales for the year ended March 2014 amounted to only Rs.12.64 crore as against Rs.1,637 crore in 2011-12, Twilight Litaka Pharma Rs.32 crore for June 2014 as compared to Rs.730 crore, Elder Pharmaceuticals Rs.1,006 crore for March 2014 as against Rs.1,324 crore, Dr Datson Rs.421 crore for March 2014 as against Rs.480 crore, Hiran Orgochem Rs.0.42 crore as compared to Rs.148 crore in 2011-12.

Hiran Orgochem equity share capital stood at Rs.98.66 crore (market capitalisation at the time of delisting was Rs.4.74 crore), Surya Pharmaceuticals equity capital at Rs.20.27 crore (M-cap Rs.3.24 crore), Plethico Pharmaceutical at Rs.34.07 crore (M-cap Rs.27.05 crore), Elder Pharma Rs.20.53 crore (M-cap Rs.78.04 crore), Twilight Litaka Rs.12.39 crore (M-cap Rs.7.14 crore), Dr Datsons Labs Rs.31.65 crore (M-cap Rs 20 crore), Ankur Drugs Rs.19.34 crore (M-cap Rs.7.47 crore) and so on. Thus this shows that due to poor financial performance the market capitalization of these delisted companies went down significantly and shareholder have lost huge amounts.

Hiran Orgochem suffered heavily and there were no sales during 2015-16 as SBI has taken manufacturing facility in its possession. The fixed assets of Hiran Orgochem were sold by Edlweiss Asset Management Company for Rs.10.65 crore in attempt to recover dues of State Bank of India. Further, Hiran has provided an interest free loan to Actgen Pharma Pvt Ltd, an associate company and the bank has taken possession of factory of Actgen for which Hiran has provided a corporate guarantee of Rs.27 crore.

Similarly, Surya Pharma incurred heavy loss and currently under debt restructuring sick company. The company restrained from disposal of assets by certain Courts and BIFR. Due to recovery actions initiated by lenders, the company was forced to suspend manufacturing activities at its various plants in earlier years.

Thus the lenders are taking steps to recover their dues. However, the stock exchanges and SEBI authorities have not been able to take actions against management of these companies for not providing latest information about the working. BSE, NSE and SEBI authorities did not reply to our query regarding their actions against several delisted companies. Latest financial results are not available and it is hard to get current status of these companies. There is no fear of actions of capital market regulators and only sufferers are public investors.

The working of few important companies like Orchid Pharma, Sharon Bio-Medicines, Ind-Swift Laboratories, Ind-Swift Ltd, Panacea Biotec, Jupitor Biosciences, KDL Biotech, Sterling Biotec, Syncom Healthcare, Syncom Formulations, etc have also put pressure on market capitalization of pharmaceutical segment. Though these companies are still quoting on stock exchanges, investors lost heavily in all these scrips during the last couple of years.