Elder Pharmaceuticals hints at clearing debt

Elder Pharmaceuticals (EPL) is looking to divest its overseas subsidiaries because of facing a severe financial crunch, according to its stock market disclosure. The decision taken by the board members in the meeting held on September 28, 2015. The company will be complying with all legal parameters and the proposal should be put forward before the Board of EPL by the Board of Elder International, FZCO - Dubai for further consideration and necessary approval.

EPL may sell its factories in Maharashtra and Uttarakhand, as well as some real estate, to raise money and repay creditors. The company's both of the factories are worth of Rs.100 to 150 crore, but that will take some time because they have to find a buyer which has a similar business model and needs those factories.

EPL's plant at Patalganga in Maharashtra makes active pharmaceutical ingredients (APIs) and has accreditation from Japan’s health regulator. The factory is engaged with contract research and manufacturing for US and European clients. The company's Langa Road facility in Dehradun, which started commercial production in March 2010, produces tablets. It is also looking to sell some real estates owned by the promoter. Besides selling assets, EPL is also in discussions with a domestic financial institution that will take over the company's non-convertible debentures (NCDs) in return for collateral.

EPL follows the June - May financial year. The company's financial results for the quarter ending on June 30, 2015 has also been delayed. Considering the company's latest quarter result, its revenue declined by 76.03 per cent to Rs 24.39 crore in Q3FY15 on yearly basis. EPL reported a loss of Rs 51.21 crore in the Q3FY15 , compared to a loss of Rs 75.28 crore in Q3FY14. The company had a total debt of Rs 848 on crore as of June 2014 which is down from the Rs 1344 crore reported in June 2013. Its debt to equity ratio stood at 1.1 as of June 2014. EPL had cash and cash equivalents of Rs 546.61 crore as of June 2014. According to the statement released on September 5, 2015 EPL is facing a severe financial crunch. Thus, the company is looking to cut down its debt burden through the asset sale.

EPL's share price increased by 3.69 per cent on BSE and is trading at Rs 112.95 on intraday basis. The company's share price zoomed on bourses around 18 per cent in last five trading sessions.

EPL is a pharmaceutical manufacturing and marketing company. The Company has operations in the women's healthcare, wound care and nutraceutical segments, and lifestyle disease management segment, as well as the anti-infective segment. It also provides industrial equipment for instrumentation and weighing based automation applications. Apart from the marketing strength, it manufactures formulations in around six manufacturing plants across the country. The dosage forms that are being manufactured in these plants include tablets, capsules, syrups, injectables, skin creams and ointments. It also manufactures few APIs, some of which are used for captive consumption.