Abbott Laboratories (India) is raising Rs 26 crore through a rights issue to shore up its net worth and improve its debt-equity ratio. The board had approved the issue on October 16.
The directors have also appointed a committee to decide on all matters relating to the issue including the ratio, price and the timing of the issue. The amount includes the premium on the issue.
The city-based Abbott Laboratories India is a 51 per cent subsidiary of the US-based Abbott Laboratories. The parent company had hiked its stake from 40 per cent last year after securing an exemption from making an open offer from the Securities &Exchange Board of India (Sebi).
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In 1997-98, Abbott's secured and unsecured loans stood at Rs 32.7 crore while its net worth was just Rs 9.95 crore. Interest charges incurred were Rs 3 crore in the same period. The company's paid up capital is Rs 2.2 crore. Its debt-equity ratio stood at an inordinately high 1.89:1.
The company's performance was modest in the second quarter ended September 30, 1998. Gross sales rose to Rs 27 crore from Rs 23.08 crore while net profit rose to Rs 1 crore from Rs 65 lakh. Net sales touched Rs 25.06 crore from Rs 21.17 crore while interest costs fell to Rs 72.81 lakh from Rs 80.52 lakh.
With the firm's Ankleshwar plant manufacturing bulk drugs and formulations already upgraded, chances of further capital expenditure in the next couple of years seems unlikely. The company aims to become a zero debt company, and most of the funds from the rights issue will be utilised to pay back costly, high-cost loans.
The company is one of the few US companies maintaining a low profile in the Indian market. They are yet to introduce most of their major products in the domestic market.
They recently got their act together when the parent increased its stake to 51 per cent and they roped in Tapan Ray, marketing director of Glaxo India as managing director.