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Aug 21, 2012, 08.20 AM IST
Indian drugmaker Wockhardt is proving there is life after debt restructuring. After defaulting on USD 110 million in overseas bonds in 2009 and renegotiating payment on Rs 13 billion in loans, the generics maker is nearly free from a sometimes bitter process of debt recast and is enjoying a furious stock rally.
While Wockhardt's imminent emergence from India's corporate debt restructuring (CDR) system is widely seen as a turnaround success, it comes as the central bank pushes for tighter rules around the process as more companies take advantage of it.
"We are one of the very few companies in the CDR who have come out and paid everything," Wockhardt Chairman Habil Khorakiwala told Reuters at the company's headquarters in suburban Mumbai.
This year, Wockhardt has seen its shares soar nearly 350% to record highs, lifting its market value to USD 2.45 billion. Its forward price-to-earnings ratio of 12.7 times is lowest among larger-cap Indian pharmaceutical companies, most of which trade at around 20 times or more.
It recently ran advertisements to crow about its success: 23% sales growth in the last fiscal year and a net debt to equity ratio now below 1, reduced from 5.5 times in March 2010. After three years keeping a low profile, Wockhardt will hold its fir s t investor relations meeting next week.
"We are becoming more or less a very normal company," said Khorakiwala, 69, who formed Wockhardt in the mid-1960s after taking over his father's Worli Chemical Works. Khorakiwala, who is Sweden's honorary consul general in Mumbai, also controls a hospital chain, Wockhardt Hospitals.
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