Nicholas Piramal to hive off NCE R&D unit

The board of Nicholas Piramal India (NPIL), at its meeting today, approved the proposal of de-merging its new chemical entity (NCE) research unit into a separate company.

According to a release issued by the company to the BSE today, the NCE undertaking, with net assets inclusive of unutilised funds collected under the rights issue of 2005 and intended for R&D totalling Rs 95 crore, will be transferred from NPIL to the new company.

"In consideration, the new company will issue equity shares aggregating to Rs 20.9 crore to NPIL shareholders in the ratio of 1:10 (i.e. one equity share for every 10 NPIL shares held).

Post the de-merger, NPIL will hold 18% of the equity capital of the new company and the remaining 82% will be held by NPIL shareholders. The new independent company will be listed on the BSE and NSE. At an appropriate time after listing, it will explore various options for raising further funds to meet its business requirements, the release said.

The NCE pipeline has expanded from five compounds in 2002 to thirteen compounds in 2007 out of which four compounds are in clinical trials. "The NPIL board approved the demerger as the dynamics of NCE R&D are different from NPIL's branded formulations or custom manufacturing businesses. Investment in NCE research calls for sharper research focus, longer time horizon and higher risk appetite. This move will also facilitate bringing in strategic or financial investors in future who may wish to invest directly in the NCE research program," the release added.