Will use sale proceeds to diversify operations: Parenteral

Parenteral Drugs (India) sold their IV Fluid manufacturing unit at Goa to Fersenius Kabi India (P) Limited for Rs 200 crore. The proceeds of this sale would be utilised for consolidation of the parent company’s business and diversification into areas like oncology, critical care and formulation businesses, CEO Anil Mittal said in an interview to CNBC-TV18.

"The unit was sold on a slump-sale basis to Fresenius Kabi to improve liquidity for the parent company." The company has no plans in the near future to sell any more units, he clarified. Also read: Cipla, DRL, Ranbaxy overcharged consumers say regulator Below is the verbatim transcript of his interview on CNBC-TV18 Q: Could you walk us through the details of the sale in terms of how much you have raised? Whether it is an all cash deal and why you chose to sell that facility to Fresenius Kabi? A: Basically, this Goa formulation facility has been sold on a slump-sale basis to Fresenius Kabi and that is just to improve the liquidity and also that the proceeds could be utilised for consolidation of the parent company’s business and diversification into the other areas like oncology, critical care and the formulation businesses. The deal has been done for a total consolidation of Rs 200 crore. This was IV fluid manufacturing unit located at Goa. Q: What percentage of your total revenues actually came from this unit? A: As of last year, the total revenues coming from the Goa unit on a consolidated basis were 5-7 percent of top line as of March 31, 2012. Q: None of the proceeds of this Rs 200 crore would be used for repayment of debt. Is it only growth capital you are saying. A: We are working it out, but as of today because we need to consolidate the business and diversify into the other areas, so the focus will be to kick start activities like formulations, critical care and oncology which have been dormant for quite some time now. Q: It’s a large amount for you to have raised though, your market cap is Rs 300 crore and you have done a sale of one unit for Rs 200 crore. Do you have any other such sales in the pipeline? Are you in conversation either with Fresenius Kabi or any other party in order to divest some of these facilities of yours? A: As of now, there is no such move contemplated. I don’t think any such move will be there in the near future. The Baddi, Jalandhar and Indore facilities would be working at its 100 percent capacity utilisation levels. Q: Rs 200 crore would be a significant part of your market cap. Is there a chance that you will give out a large dividend to you shareholders to reward them for this transaction? A: It is quite early to comment upon it.