The promoters of Ujjain-based Shriji Polymers (India) have expressed an interest in acquiring a stake in Sharon Bio-Medicine which has been admitted by the NCLT (National company law tribunal) for insolvency proceedings. An executive at Shriji Polymers confirmed the development to FE explaining the proposed acquisition made sense given the synergies between the two businesses. “We have expressed our interest in picking up a stake in the company,” the executive told FE. As of March 2016, Sharon Bio owes lenders Rs 836 crore, Bloomberg data shows. In FY16, the company reported a loss of Rs 299.20 crore on revenues of Rs 253.45 crore. The FY16 figures are for the nine-month period from July 2015 to March 2016. Both Shriji and Sharon have some common clients, the executive from Shriji explained, pointing out the proposed acquisition would lead to an expansion of the business. Sharon Bio-Medicine declined to comment on the development in response to a request.
State Bank of India, Indian Overseas Bank, Union Bank, Punjab National Bank, Bank of Maharashtra, and Allahabad Bank are some of the lenders to the firm. Bankers FE spoke to indicated the proposal from Shriji would be considered at the meeting of creditors shortly. Only after the offer was examined, they said, would it be possible to indicate whether it was feasible and how much of a haircut they might need to take. Bankers have been unwilling to take very big haircuts and this has been one reason why not too many deals have gone through. The promoter shareholding of Sharon Bio was 32.53% at the end of September 2017, of which 11.16% is held by Ramco Properties and 10.27% is with Revon Consultancy and Management Services. On Tuesday, the company’s share price stood at Rs 7.66 with the market cap at Rs 80.87 crore.
In its annual report for 2015-16, the company stated that its profitability has been impacted substantially due to a fire outbreak at a plant in 2014. Following this, it had to outsource the manufacturing of products, the company indicated. “During the process, quality of products got hampered and this led to rejection of goods from customers subsequently trailed by cancellation of our order books. Relationship with many of our customers were stressed due to quality issues and inability to execute orders on time. This had adversely affected our top line and operating margin resulting into heavy losses,” the company said in the report. The corporate insolvency resolution process for Sharon Bio was initiated with effect from April 11, 2017. The petition was filed by Culross Opportunities SP and Peter Beck and Partners who are registered holders of a certain portion of the zero percent convertible bonds issued by the company.
The petitioners stated they constitute 86.06% of the holders of bonds. In October, the company was granted an extension of 90 days for the completion of the insolvency resolution process. Sharon is listed on the BSE and the NSE. According to the company’s website, it offers services in preclinical toxicology on small animals, chemical process development and scale up, formulation development, analytical method development, DMF and Dossier preparation, commercial manufacturing of intermediaries, actives, finished dosages. Shriji Polymers is a pharma packaging company and has three existing units each in Ujjain, Pithampur, and Goa which have the capacity to yield around 1.5 million containers and 2 million closures a day.