The two companies are promoted and chaired by the city-based entrepreneur, Desh Bandhu Gupta. Both the companies are listed on the Bombay Stock Exchange.
As a precursor to the merger, the accounting year-ends of both the companies are being brought forward to March 2000 from June and July 2000, respectively. The boards of both the companies are expected to give the green signal to the move at their respective meetings at the end of the month.
The merger is intended to integrate the bulk drugs and formulations activities of the two companies and also to reap operational efficiencies. While Lupin Labs is involved in the manufacture and marketing of bulk drugs and formulations, Lupin Chemicals is purely a bulk drugs manufacturer with revenues coming from anti-tuberculosis drug rifampicin and intermediate rifamycin-S. The latter's fortunes have taken a downturn falling a crash in domestic prices of rifampicin.
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Lupin Labs is a market leader in anti-TB drugs and also has a presence in anti-infectives, anti-inflammatory, cardiovascular and neuropsychiatry.
The exercise may result in redundancy as the two have four manufacturing units between them. While Lupin Labs has three in Mandideep, Aurangabad and Ankleshwar, Lupin Chemicals has one at Tarapore. There will also be a duplication of several functions.
The merger, in a way, signals the group's entry into the final lap of its ongoing restructuring programme. Though disclosed by group chairman Gupta over a year ago, the merger was held back until the group flagship Lupin Laboratories completed an organisational and financial revamp involving top management changes and paring exposure to the Guptas' closely-held real estate companies.
For the nine month period ending March 2000, Lupin Labs clocked a turnover of Rs 537 crore while for a similar duration ending April 2000, Lupin Chemicals notched up sales of Rs 75.69 crore.
There is still no indication from the Guptas about the intended time-frame for the completion of the merger. Both Gupta and his daughter and executive director Kavita Gupta were traveling and unavailable for comment.