Sol Pharma May Hive Off A Few Brands

Faced with serious financial crunch, Sol Pharmaceuticals Ltd is considering hiving off some of its formulation brands on royalty basis.

Three months ago, SOL Pharmaceuticals had sold two of their formulation brands Antacid Riflux and Antibiotics Clamp to Dr Reddys Laboratories.

However, there has been rethinking on the part of the companys management on the issue of selling brands.

They now feel they should retain ownership of the remaining brands, at least on royalty basis.

Company sources told Business Standard that some of the brands like the anti-allergic Alday, antibiotics Danemox and Solexin Kid and other 40-odd brands it still retains have a good market and it would be prudent for the company to retain them.

 

The sale of brands like Riflux and Clamp, the sources said, was out of panic at a time when the company was facing serious financial crisis.

They maintained that SOL is still not out of the woods with it having exhausted over Rs 90 crore working capital bank accommodation.

Though the company had declared a 30 per cent dividend in 1995-96, it has not yet made any announcements on 1996-97 payout as it is yet to declare the financial results for the year.

In fact, the Hyderabad Stock Exchange had issued a notice to the company asking the reasons for not submitting its financial results for 1996-97.

Sol Pharmaceuticals informed the exchange that it has extended its financial year by six months, to September 1997.

The exchange, however, insisted that Sol Pharmaceuticals should submit its half-yearly results for the year ending March 31 and the matter is still pending.

The matter had come to the notice of the Securities and Exchange Board of India (Sebi) when its officials visited the city last week.

The Sebi officials sought explanation on numerous complaints from investors including the payout.

Sol, it was learnt, told the regulatory watchdog officials that it had intended to pay the dividends from the Rs 40 crore it realised last year from sale of their Alday bonds.

But some problems erupted from their bankers, who adjusted the amount against overdues, it said.

There are apprehensions among investors that ultimately SOL Pharmaceuticals will pull down the shutters. This fear has gained credibility with the companys promotors launching a new firm called SOL Health Pharmacy Ltd, obstensively for marketing Sol formulations.

Reports indicate that of the four bulk drugs and one formulations unit under the SOL umbrella, only one situated at Hyderabad is working, that too at much below capacity.

Most of the marketing staff of SOL Pharmaceuticals have either been shifted to the Health Pharmacy or have left the job. None of the senior executives were available for comment.

Sol Pharmaceuticals chairman C Chandrasekhara Reddy is reportedly in Mumbai, holding discussions with a financial outfit.

Managing director T Uttam Reddy was not available for comment despite attempts to reach him at each of the companys different offices in the city.

For the six months ended September 30, 1996, for which the latest financial results are available, Sol Pharmaceuticals reported a turnover of Rs 120 crore and net profit of Rs 4.32 crore.