Mumbai: Strides Shasun Ltd on Friday announced an organizational restructuring plan which will see it demerge and list its active pharmaceutical ingredients (API) business, exit probiotics and cap its investment in the biotech business.
The Bengaluru-based company said it will retain its consumer-facing formulations business in regulated and emerging markets and carve out its business-to-business (B2B) operations.
The company has sought shareholder approval to demerge the commodity API business. A related API business currently owned by SeQuent Scientific Ltd (which is owned by the promoters of Strides Shasun) will also be merged into the proposed new API company in a bid to provide critical size to this business, according to the filing.
The board of Strides Shasun has formed a committee, comprising of 3 independent directors, to appoint valuers, merchant bankers, solicitors and other intermediaries for the scheme of de-merger.
The new API company will have five manufacturing sites, which include three facilities approved by the US Food and Drug Administration (US FDA).
Strides Shasun plans to rename itself as Strides Pharma Ltd. Post restructuring, the new Strides Pharma will comprise its retained formulations business having four US FDA-approved plants in India, Europe and Singapore, and three research and development (R&D) centres. This business will have a front-end presence in the regulated markets of Australia, US and UK and emerging markets of Africa and India.
In Africa, Strides Shasun plans to consolidate manufacturing of branded generics products at its Kenya unit and divest its remaining six generic facilities in Africa to the existing management team.
“The structuring is directed towards having a sharper focus on compliance, supply chain and front-ends to provide the necessary growth impetus for its consumer facing formulations business. This business is expected to have a superior margin profile, better asset turnover and a healthy return on capital,” Strides Shasun said.
As part of the overall restructuring, Strides Shasun plans to exit its 51% stake in the probiotic business that it had acquired in December 2015 from Shriram Group promoted-Medispan. The business has not been able to achieve the intended strategic objectives and milestones over the last 12 months and has shown a decline in revenues. The promoters of Strides Shasun will acquire the 51% stake and the business will be managed by its erstwhile promoters Medispan who will drive the growth strategy for the business.
Separately, Strides also reported an over three-fold jump in its consolidated net profit to Rs 187.32 crore for the quarter ended December. The company’s shares closed at Rs 1194.30 on BSE, up 10.55% from the previous close.