Cipla rose 1.15% to Rs 575 at 9:40 IST on BSE after the company announced that its wholly owned subsidiary entered into a joint venture agreement with Ahran Tejarat Company.
The announcement was made after market hours yesterday, 14 December 2016.Meanwhile, the S&P BSE Sensex was up 97.89 points or 0.37% at 26,700.73.
On the BSE, 18,438 shares were traded in the counter so far as against average daily volume of 1.42 lakh shares in one quarter. The stock had hit a high of Rs 576.20 and a low of Rs 569 so far during the day. The stock had hit a 52-week high of Rs 660 on 29 December 2015. The stock had hit a 52-week low of Rs 458.25 on 25 May 2016.
The stock had outperformed the market over the past one month till 14 December 2016, gaining 3.41% compared with the Sensex's 0.81% fall. The scrip had also outperformed the market in past one quarter, declining 1.42% as against the Sensex's 6.24% fall.
The large-cap company has equity capital of Rs 160.85 crore. Face value per share is Rs 2.
Cipla announced that Cipla Holding B.V., a wholly owned subsidiary of the company in Netherlands, Cipla Netherlands, has entered into a joint venture agreement with its joint venture partner, Ahran Tejarat Company.
Cipla Netherlands will hold a 75% stake in a joint venture company in Iran while Ahran Tejarat will hold the remaining 25% stake. The expected investment by Cipla Netherlands is estimated to be a maximum of Euro 16.875 million.
The joint venture company proposes to undertake manufacturing and marketing of pharmaceutical products in Iran.
As part of the transaction, Issat Company, an existing company in Iran incorporated on 19 January 1998 and currently owned by Ahran Tejarat, is proposed to be used as the JV company for the purposes of the transaction.
Issat Company has a valid pharmaceutical manufacturing license in Iran and also owns certain fixed asset but has not undertaken any business activity since incorporation and as a result does not currently have any turnover.
Cipla Netherlands will initially acquire a 75% stake in Issat Company from the JV partner for a consideration of Euro 1.35 million payable in cash and the balance amount of upto Euro 15.52 million is expected to be infused by Cipla Netherlands into Issat Company as equity over next one year period.
The acquisition is expected to be completed by March 2017, subject to completion of conditions precedent and applicable regulatory approvals.
Separately, Cipla announced that a meeting of the board of directors of the company is scheduled to be held on 19 December 2016, to consider the proposal of raising funds through issue of equity shares or American depository receipts or global depository receipts or foreign currency convertible bonds or non-convertible debentures- in the form of bonds or otherwise or bonds or any other securities/financial instruments, whether denominated in Indian Rupee and/or foreign currency(ies), either by way of a public issue or by way of a private placement, including through a qualified institutions placement in accordance with the provisions of the applicable law.
The fund raising would be subject to necessary permissions, sanctions and approvals, including shareholders' approval and such other statutory approvals as may be required and the provisions of the laws.
On a consolidated basis, Cipla's net profit dropped 34.7% to Rs 354.34 crore on 8.7% rise in net sales to Rs 3671.88 crore in Q2 September 2016 over Q2 September 2015.
Cipla is a global pharmaceutical company.
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