Ajanta Pharma’s 30-Plus worth about Rs 1.5 crore, not Rs 50 crore

As per media reports, it seems that drug maker Ajanta Pharma had sold its multi-vitamin supplement brand '30-Plus' to Dabur India in May 2011 for a price consideration of Rs 50 cr. While it is true that the said business acquisition was accepted by the boards of both companies, they however blatantly denied revealing the actual price of the deal. Hence, it is safe to assume that the price of Rs 50 cr as reported by the media does not stand true, and requires further scrutiny. We, at DSIJ, have probed into this matter to bring clarity to our readers on the subject.

The profit and loss statement of Ajanta Pharma for Q1 FY12 has reported 'Other Income' of Rs 1.77 cr. If we analyse last 10 quarters (excluding Q1 FY12), its average Other Income figure stood at Rs 35 lakh. Assuming 35 lakh as Other Income in the first quarter and deducting the same from the Other Income of Rs 1.77 cr, we arrive at a price of Rs 1.41 cr for ’30-Plus’.

When we asked Ajanta Pharma's CFO, Arvind Agarwal, about the net realisations, he refused to comment. However, he clarified that the price of the deal is not Rs 50 cr, as reported in the media. He also hinted towards the Other Income stated in the half yearly statement as a fair judgment of the same.

Moving on to analyse the ramifications of the deal, we have observed that this brand was launched by Ajanta two decades ago, and was not actively pursued for about 5-6 years. The chief motive behind selling this brand is that it wanted to focus more on the specialty drugs, and do away with the OTC products. The OTC market is also getting over-crowded, and besides, it requires major expenses in advertising and promotion. Ranbaxy already has its blockbuster brand ‘Revital’ in the market. There are many small brands in this multi-vitamin market, which are creating stiff competition in the segment. Thus, we believe that the company's decision to exit this brand would prove to be beneficial.