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Last Updated : Aug 11, 2015 03:35 PM IST | Source: CNBC-TV18

Hope to complete merger formalities by October end: Shasun

Abhaya Kumar, MD at Shasun Pharmaceuticals said the company's merger with Strides will be completed as soon as court approvals of the latter are in place. He is sure the merged entity will be effective from April 1 2015 itself.

Abhaya Kumar, MD at Shasun Pharmaceuticals said the company's merger with Strides Acrolab will be completed as soon as court approvals of the latter are in place. He is sure the merged entity will be effective from April 1 2015.
Below is the transcript of Abhaya Kumar's interview with Ekta Batra and Anuj Singhal on CNBC-TV18.

Ekta: I am going to start with what a lot of people want to know in terms of the progress of the Strides Arcolab and Shasun Pharmaceuticals merger. Where does it stand and what can we hear next?

A: The Strides and Shasun merger has to go through some formalities which includes the court approvals. From Shasun side, all the formalities have been completed, even including the shareholder approval and the High Court approval from Chennai. We have already informed the stock exchange about it that we have completed all the formalities from our side.

From Strides side, they have to get the approval from the court in Mumbai and the hearing has been scheduled for August 14. So, once the 14th hearing is over they might get the approvals in the next 30 days. With that we will be completing all the formalities.

Foreign Investment Promotion Board (FIPB) has already relaxed the norms and we hope to have the FIPB clearance also. According to the new norms you don’t have to go back to FIPB at all but still we as a point of clarification we will seek their approval too.

Anuj: Would it be safe to assume that over the next two to three months this process should be completed?

A: By September 15 we will have the court approvals and by October end we hope to complete all the formalities and it will be a merged entity by then. It is effective from April 1 2015 itself, the court approvals have already been given from April 1. So, merger will happen from April 1 itself.

Ekta: Let us just talk a little bit about your numbers. Your revenue was quite subdued in terms of growth but your EBITDA compensated for it. However, concentrating on your topline can you tell us how much maybe Active Pharmaceutical Ingredient (API) contributed, how much did you get from Contract, Research and Manufacturing Services (CRAMS), how much did you get from your finished dosage?

A: If you look at the numbers, the total sales have been Rs 319 crore and API has been 73 percent and formulation has been 27 percent. However, the biggest growth what we are seeing for this year is coming from UK where we have good amount of CRAMS business already booked and we have order booking of almost 97 percent as on date for the entire year for FY16. We expect a growth of more than 30-35 percent in UK. So, UK business has ramped up very well and the people have shown a lot of confidence in the merged entity and a lot of business has started coming in.

Ekta: Can you tell us about what the margin picture might be looking like because you are still in single digits at this point. How much do you think you can possibly ramp it up to and especially being a merged entity?

A: By the year end our projections are that we will be between 15-20 percent EBTDA levels. It will be in double digit.

Ekta: What will lead to double digit margins for Shasun and are you talking about it on a consolidated entity basis or standalone?

A: This is on a standalone basis of Shasun but the combined entity will be much better than this because Strides have higher margins. The growth in Shasun’s margins will come mainly from formulations business which growing by more than 50 percent again this year and higher margins which are going to come from UK.

Ekta: Can you tell us a little bit about the fact that you are one of the most dominant players in the Ibuprofen market. How much of a market share do you have, whom do you supply to and how much more do you think you can ramp up your market share to?

A: Ibuprofen market has been growing at the rate of more than 7-8 percent per annum worldwide. We are currently catering to 45 percent of the world requirement and we have plans to increase our capacity with the modified process and we are looking towards Green Chemistry in Ibuprofen itself. So, we expect to have a growth of at least around 20 percent in our capacities and grow our market share by at least around another 3-4 percent.

Ekta: What does your balance sheet look like and how much would it possibly be on a consolidated basis with the merged entity as well?

A: It is too early to predict but on Shasun alone the growth will be at least around 40 percent over the last year on the topline and EBITDA levels will also grow by at least around 40 percent.



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First Published on Aug 11, 2015 12:33 pm
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