Date: 02.09.2007
Nicholas Piramal India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 31, 2007, has approved the proposal of de-merging its New Chemical Entity (NCE) Research Unit under a Scheme of Arrangement into a separate Company (Transferee Company) in which the Company will hold equity capital of Rs 5 crores.
Nicholas Piramal India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 31, 2007, has approved the proposal of de-merging its New Chemical Entity (NCE) Research Unit under a Scheme of Arrangement into a separate Company (Transferee Company) in which the Company will hold equity capital of Rs 5 crores.
Under the proposed Demerger Scheme, the NCE Undertaking with net assets (at book value) inclusive of unutilized monies collected under the Rights Issue of 2005 and intended for R&D to the extent of Rs 95 crores would be transferred from the Company to the Transferee Company, with effect from April 01, 2007, which is the Appointed Date under the Scheme. In consideration, the Transferee Company would issue fully paid up equity shares aggregating to Rs 21 Crs to the shareholders of the Company in the ratio of 1:10 ( i.e. 1 equity share of Rs 10 for every 10 equity shares of Rs 2 each held in the Company).
The Transferee Company would be listed on the BSE and NSE and after listing, at an appropriate time, will explore various options for raising further funds to meet its business requirements.The above Scheme is subject to applicable regulatory and other approvals.In this regard the Company has issued the following Press Release:"Nicholas Piramal India Ltd (NPIL) on August 31, 2007 has announced that its Board of Directors has approved the proposal to de-merge its New Chemical Entity (NCE) Research Unit into a separate Company.Since 2003, NPIL has strengthened its efforts on the NCE research front. The NCE pipeline has expanded from five compounds in 2002 to thirteen compounds in 2007, out of which four compounds are in clinical trials. NPILs Investigational New Drug (IND) Application for its lead molecule P-276 has recently been approved by the USFDA and clinical trials will soon commence for multiple myeloma - a devastating type of cancer - in collaboration with Harvard Medical School and Dana Faber Cancer Centre, USA. The Companys R&D capabilities have also been recently validated by virtue of research collaboration with Eli Lilly for a metabolic compound of the US-based pharmaceutical Company. Both Companies share risks and rewards in this collaboration.NPIL expects to have eight compounds in clinical trials by end of the current financial year. This will result in increased spend as clinical development costs constitute about 2/3rd of the total R&D cost of a drug. NPIL wishes to complete development upto proof-of-concept (end of Phase II) for all its pipeline compounds and bring to market certain niche compounds on its own. The dynamics of NCE R&D are different from NPILs branded formulations or custom manufacturing businesses. Investment in NCE research calls for sharper research focus, longer time horizon and higher risk appetite. Keeping in view these factors, the Board of Directors of the Company has today approved do-merger of its NCE unit into a separate company in which NPIL will hold equity capital of Rs 45.5 million. This move will also facilitate bringing in strategic or financial investors in future who may wish to invest directly in the NCE research program.Under the de-merger scheme, the NCE Undertaking, with net assets (at book value) inclusive of unutilized monies collected under the Rights Issue of 2005 and intended for R&D to the extent of Rs 950 million, will be transferred from NPIL to the New Company. In consideration, the New Company will issue fully paid up equity shares aggregating to Rs 209 million to the shareholders of NPIL in the ratio of 1:10 ( i.e. 1 equity share of Rs 10 for every 10 equity shares of Rs 2 each held in NPIL).Post de-merger, NPIL will hold 18% of the equity capital of New Company and the remaining 82% will be held by the shareholders of NPIL. The New Company will be an independent company. It will be listed on the BSE and NSE. At an appropriate time after listing, the new Company will explore various options for raising further funds to meet its business requirements. This scheme of de-merger is subject to applicable regulatory and other approvals."
Buy Nicholas Piramal, Cmp: 257.60 target Rs 345: Neha Securities