TT Jagannathan, chairman, TTK Healthcare says, in an interview to CNBC-TV18, that the merger of TTK Healthcare with TTK Protective Devices will boost the merged entity’s revenues from contraceptives to Rs 500 crore by FY18.
TTK Protective Devices is the largest condom-making company in the world with a capacity of two billion condoms
T T Jagannathan
TT Jagannathan, chairman, TTK Healthcare says, in an interview to CNBC-TV18, that the merger of TTK Healthcare with TTK Protective Devices will boost the merged entity's revenues from contraceptives to Rs 500 crore by FY18.
Jagannathan adds that the merger was decided upon to resolve pricing problems and procedural bottlenecks between TTK Healthcare and TTK Protective Devices.
Below is the edited transcript of the interview on CNBC-TV18
Q: What is the rationale of TTK Healthcare's merger with TTK Protective Devices which is unlisted and its share-holding pattern is not known? By how much will the equity of the listed company rise?
A: TTK Protective manufactured contraceptives which were distributed by TTK Healthcare and this gave rise to various pricing problems. It also did not bode well for a listed company to deal with its unlisted arm that was wholly owned by promoters.
So, the merger was the best way to solve both problems. TTK Protective Devices is the largest condom-making company in the world with a capacity of two billion condoms and we supply almost every major brand in the world.
Q: Can you tell us something about TSL Techno Services Limited?
A: It is small company which holds five acres of land and nothing else.
Q: By how much will the equity increase and who owns majority stake?
A: I cannot disclose those details.
Q: So what will be the level of sales after this merger? What was the level of sales at TTK Protective Devices? And how high will the revenues and profit rise for FY13?
A: For FY13, the revenue should be up a tad over Rs 100 crore. But by FY18 the additional revenue from condoms will be about Rs 500 crore.
Q: Can you confirm the merger ratio posted on the BSE website- share holders of TTK Protective will be entitled to 9 shares for every two shares of TTTK Healthcare?
A: The market value of TTK Healthcare is about Rs 400 crore and valuation of TTK Protective is about Rs 300 crore while TTK Protective has a paid-up capital of only Rs 1 crore.
Q: What is TTK Healthcare's stake in TTK Protective?
A: There is no TTK Healthcare stake in TTK Protective.
Q: How much promoters own?
A: The promoters own 99.8 percent of TTK Protective.
Q: What do you plan to do with the 5 acres with TSL Techno now that it will become a part of the listed entity?
A: We have not decided on that yet.
TTK Healthcare stock price
On November 21, 2014, TTK Healthcare closed at Rs 784.70, down Rs 22.45, or 2.78 percent. The 52-week high of the share was Rs 932.85 and the 52-week low was Rs 450.00.
The company's trailing 12-month (TTM) EPS was at Rs 18.21 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 43.09. The latest book value of the company is Rs 137.69 per share. At current value, the price-to-book value of the company is 5.70.
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