Elder Pharma files for insolvency

Company's debts stood at Rs, 1000 crore at June-end in 2014

Elder Pharmaceuticals has filed for insolvency, in an attempt to restructure its debt, according to a source.

The company had suffered a loss of Rs 51 crore in the quarter ended March 2015. 

It was the last intimation by Elder to the BSE on its financials.It had an unpaid debt of around Rs 1,000 crore as on end of June 2014. Trading of its shares has been suspended on the bourses.

An insolvency professional told Business Standard, “With its high debt and inability to pay it, the company itself has gone for insolvency. Now, it can come up with a restructuring plan.”

Calls and text messages to the company’s joint managing director, Alok Saxena, went unanswered. 

Investors had taken Elder to court.  Around 23,000 small investors have not been paid their principal or the interest on their fixed deposits in the company. Around Rs 150 crore are the dues to these. The company also has dues to the statutory authorities worth Rs 8 crore.

In April last year, the company declared to the Mumbai High Court that it had assets worth Rs 1,935.77 crore. It had written off trade advances of Rs 176 crore and other advances worth Rs 855 crore to various parties.

The company is also in trouble in Dubai, where it is the guarantor for its international subsidiary. A bank has taken legal action to enforce payment of the guarantee. This is worth almost Rs 95 crore.

Experts are baffled as to why Elder has not been able to set its books right with the assets it has.  The company even sold 30 of its brands to Torrent Pharmaceuticals. Its real estate assets are worth at least Rs 600 crore. The company had stated that depositors and investors have not been paid due to litigation.

The company began disintegrating after the demise of founder Jagdish Saxena and a family feud. 

Set up in 1988 with a manufacturing plant in Navi Mumbai, it had a major presence in women’s health care, lifestyle diseases and pain management. Shelcal, its calcium supplement, is a leading brand. 

Around 90 per cent of its revenue was from the domestic market.