Orchid hangover for Dr Reddy's, Strides

At least two pharmaceutical companies "� Dr Reddy's Laboratories and Strides Arcolabs "� have less than 26 per cent promoter holding and the recent market crash can make them vulnerable to raiders, corporate observers said.

There were already reports of Nicholas Piramal planning to acquire a substantial stake in Strides Arcolabs "� something that the latter has denied strongly.

The promoters of Dr Reddy's have 25.15 per cent stake as on December 31, 2007 and the share value of the company has dipped 19.9 per cent since January 1 this year.

Dr Reddy's Holdings Pvt Ltd, a family concern of founder and chairman Anji Reddy, holds 22.47 per cent in the company. Besides, Anji Reddy, his son K Satish Reddy and son in law G V Prasad have stakes of less than one per cent each.

On the other hand, the Bangalore-based Strides Arcolab had only 18.82 per cent promoter-holding as on December 31, 2007. The stock price of the company has gone down 34 per cent in the same period.

The promoters, it seems, are acutely conscious of this and are taking small steps to correct the situation. Agnus Holding, a group concern of Strides, has increased its holding from 0.70 per cent as on December 31, 2007 to 1.44 per cent.

Dr Reddy's board at its meeting in January-end, decided to raise further equity by way of preferential issue of share warrants up to 5 per cent of the existing equity, exercisable into equal number of equity shares of Rs 5 each to promoters and the promoter group.

"I have no comments to make on the board decision and will inform the stock exchanges as and when it happens," said G V Prasad, vice-chairman and chief exective officer of Dr Reddy's Laboratories.

When such warrants are executed, companies are required to inform the regulator within 24 hours.

Most major domestic drug companies have substantial promoter holding. These include Zydus Cadila (72.02 per cent), Sun Pharma (65.55 per cent), Wockhardt (73.64 per cent), Dishman Pharma (61.45 per cent), Aurobindo (55.27 per cent), Alembic (61.21 per cent) and Panacea Biotech (65.26 per cent).

Some others such as Biocon, Lupin, Nicholas Piramal, Jubilant, Ipca Laboratories, Glenmark, Unichem and J B Chem maintain their promoters holding above 40 per cent, while Ranbaxy Laboratories has 34.83 per cent promoter-holding), Cipla (39.38 per cent) and Kopran (27.67 per cent).