Sun Pharma today said a group of independent directors of US arm Caraco has been constituted to evaluate plans to delist the subsidiary, whose continued loss is becoming a cause for concern to the parent firm.
The Mumbai-based firm, which post sales of Rs 1,601.07 crore in the third quarter this fiscal, has also revised its earnings forecast to 42 per cent from an earlier estimate of 35 per cent over sales achieved in 2009-10.
"A community of independent directors of Caraco has been formed for this purpose (for delisting). The committee has retained its own financial and legal advisors to help them evaluate Sun Pharma's proposal," Sun Pharma Chairman and Managing Dilip Shanghvi said in an investor call.
During the third quarter, Sun Pharma has expressed an interest in taking Caraco private, he added.
"From our point of view I think one of the important concern is the continued period of consistent loss in Caraco," Shanghvi said.
Caraco reported a net loss of $3 million for the third quarter ended December 31, 2010.
At present, Caraco is listed at the New York Stock Exchange and Sun holds 75 per cent stake in it.
"Caraco has disclosed that it would not be in a position to commence manufacturing of products by end of FY11. This delay in return to normalcy, which is per Caraco's disclosure is going to take significant time," Shanghvi said.
Caraco's problems began in 2008 when unresolved good manufacturing practice (GMP) violations in its Michigan facilities prompted a visit by US officials.
Manufacturing defects led to contamination issues and Caraco was forced to stop manufacturing activities at its sites and hire a consultant to oversee the operations overhaul.
Meanwhile, the company today also revised its 2010-11 sales growth guidance to 42 per cent over the reported sales of 2009-10. Sun had in November 2010 projected a 35 per cent growth for this ongoing fiscal.
"Now with nine months of financials available, we revise our 2010-11 sales growth guidance to 42 per cent over the reported sales of 2009-10," Shanghvi said.
The company is also planning to set up its own sales and marketing organisation in the US.
"I think the transition plan would basically involve Sun setting up its own sales and marketing organisation," Shanghvi said, adding that the company was not looking at acquisitions in the US in the near term.
The company also said that it has received a favourable ruling in its appeal in eloxatine generic case.
"The litigation has been remanded back to district courts. We continue to evaluate all our options," Shanghvi said.
Shares of Sun Pharma today closed at Rs 432.20 on the Bombay Stock Exchange, down 1.91 per cent from its previous close.
