There was some regulatory overhangs post Strides-Mylan Agila transaction, says Arun Kumar, Executive VC & MD of Strides Shasun.
However, when the deal was done we ended up settling it at USD 70 million instead of USD 60 million. Hence, we get USD 30 million immediately as a settlement on the regulatory escrows, he said. Below is the verbatim transcript of Arun Kumar’s interview to Latha Venkatesh, Anuj Singhal & Sonia Shenoy.
Sonia: Can you tell us what exactly the settlement looks like and what kind of payment will you receive?
A: When we sold Agila to Mylan there were several escrows related to regulatory and other contingent liabilities and tax. So, there was a little overhang on the regulatory considering that the regulatory issues were taking a little time and that is now being satisfactorily resolved and Mylan and Stride agreed for a settlement.
We had guided, when the deal was done, that we would spend approximately USD 60 million but we ended up settling it at USD 70 million. So, we still get USD 30 million immediately as a settlement on the regulatory escrows. However, they will also release all the general claims. We do have another tax escrow which is only due in 2017 so that is another matter to address at that time.
Latha: You are getting USD 30 million out of USD 100 million, the other USD 100 million remains?
A: That is right.
Sonia: Just wanted to ask you little bit about what the second half of the year will look like because the stock has been running up quite a bit on the comments that came in from the management regarding the guidance in the second half. In the first half you did an EBITDA of almost Rs 300 crore, what are we looking towards in the second half and what could lead to that?
A: We guided the market for an EBITDA range of Rs 440-475 crore which is almost 50 percent greater than our H1 performance. This is predominantly to do with several of our inorganic strategies now working out well as the synergies are falling into place. We were probably about a quarter or two delayed in that but that is behind us. We were confident of giving the stronger guidance as a consequence.
Anuj: A newspaper report indicates you have plans to list your biotech business, Stelis Biopharma; any thoughts on that?
A: It is a board approved proposal that we list Stelis biotech arm separately. It is a process which will take between seven months and eight months. However, we will kick-start the process in this quarter.
Latha: How long might it take?
A: It is a court process so it should take about eight to nine months.
Latha: Just wanted to ask a little bit on the second half EBITDA guidance, you are giving raw material or rather API of the Renvela drug. Can you tell us whether the supplies have begun and how strong can the earnings from that be, who are the people you are supplying to?
A: We cannot give product guidance but I can confirm -- we believe that we are one of the few API suppliers to a group of generic approvals that we expect and we have started manufacturing and will commence supplies in this quarter for several of these partners.
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