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USFDA nod a strong trigger for Zenotech despite legal issue
In a latest mishap, Zenotech failed to pay salaries to its employees for the first time in its eight year history due to non-payment of dues by majority shareholder - Ranbaxy. Promoter Jayram Chigurupati feels that the company is being neglected by Ranbaxy, reports CNBC-TV18's Appaji Reddem.
A legal battle between original promoters and current owners is threatening to derail Hyderabad-based Zenotech Laboratories . In a latest mishap, the company failed to pay salaries to its employees for the first time in its eight year history due to non-payment of dues by majority shareholder - Ranbaxy. Promoter Jayram Chigurupati feels that the company is being neglected by Ranbaxy , reports CNBC-TV18's Appaji Reddem.
Despite legal problems, the company has a ray of hope in the form of product pipeline and USFDA approval to one of its Hyderabad facilities. The facility is a good value proposition for its Japanese owner Daiichi or any other company which is interested in buying it. However, analysts opine that investors should think of legal problems associated with the company before taking a call on the stock.
Satish Kantheti, analyst and joint managing director of Zen Money, said, "The primary issue would be the legal tussle going on between the old promoter and the new promoter. Once that is resolved, operational hiccups will reduce because of the recent development of the company getting USFDA approval and becoming more attractive than what it was from that stand point."
The issue of USD 1 billion USFDA fine could be a priority for Ranbaxy and Daiichi when compared to grooming Zenotech. But it's a good value proposition for analysts and original promoters. Given the ground reality, it's a matter of time for Zenotech before coming back with flying colors.
