The board of Shilpa Medicare approved the transfer of API business consisting of Unit-1 and Unit-2 situated at Raichur, Karnataka by way of slump sale to a wholly-owned subsidiary of the company.
Shares of Shilpa Medicare rose 1.34% to Rs 611.20. The stock hit a high of Rs 628.20 and a low of Rs 608 so far.
API business is being spun-off into a separate company which would be a wholly owned subsidiary (to be incorporated) of Shipa Medicare to be engaged in the business of manufacturing of active pharmaceutical ingredients and intermediates.
The board of directors of the company have approved the proposed transaction on 12 July 2021 including authority to officers of the company to enter into the business transfer agreement to give effect to the transaction which will be executed in due course. The sale is expected to be completed on or before 30th September 2021.
The transaction will be between related parties as the seller and buyer would be holding company and wholly owned subsidiary respectively. The transaction is proposed to be carried out for a consideration and would be at arms length.
The slump sale will result into operational synergies and lead to overall cost optimisation. It will also result in a focused approach with the desired management band width and operational plans for each business of the company separately. It will provide greater flexibility in pursuing long-term growth plans and strategies. It also help the management to efficiently exploit the available funding opportunities for each business independently.
On a consolidated basis, Shilpa Medicare's net profit slumped 77.35% to Rs 7.83 crore on 5.44% decrease in revenue from operations to Rs 208.03 crore in Q4 March 2021 over Q4 March 2020.
Shilpa Medicare is a global brand in manufacturing and supplying of affordable API and formulation globally in different regulated markets.
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