The proposed revamp has been done in line with the recommendations of international management consultants Mckinsey & Company and comes less than a year after Wockhardt acquired Tata group company Merind in July 1998. The demerger is proposed to "take effect from January 1, 2000", subject to various approvals and due compliance with the provisions of the Companies Act.

Wockhardt chairman Habil Khorakiwala said the key businesses that would form part of the demerged entity include: Fluid therapy, nutrition, agrisciences and the property business. While the management is yet to take a decision on the group's hospitals business, the company plans toexit from diagnostics.

Wockhardt's pharmaceutical business will include Merind's operations,the veterinary business, besides formulations and bulk-drug segments. "The demerger should provide tremendous depth and focus to Wockhardt's pharmaceutical business and re-affirms the company's commitment to creating and enhancing shareholder value," Khorakiwala said.

This will also improve value for pharma-specialist investors even while giving the other businesses an equal growth opportunity given that the dynamics are different, he added.

For the financial year 1998, pharmaceutical formulations registered sales of Rs 169.7 crore, fluid therapy (essentially the IV fluids business) Rs 53.7 crore, medical nutrition Rs 28 crore (with its hi-tech plant at Chandigarh going on-stream this year), biostadt agrisciences Rs 50.5 crore and the super-specialty hospitals business raking in another Rs 19 crore. Wockhardt's IV fluids business (the company is a market leader with a share of 30 per cent) is handled bysubsidiary company, Wockhardt Healthcare.

Merind, on the other hand, posted total sales of Rs 106.1 crore for the half year (HY) 1999 of which the veterinary and diagnostics business account for Rs 10.3 crore and Rs 40 lakh. Merind, in which Wockhardt owns 97 per cent equity stake (post-open offer), has since been delisted.

Asked whether Merind and Wockhardt Healthcare would continue to be subsidiaries under the new scheme of things, Khorakiwala said that "legal issues have yet to be finalised".

The demerged company will also retain the Wockhardt tag (possibly with a suffix) to cash in on the brand value. The inherent worth of Wockhardt brand is estimated at Rs 331.9 crore.

Wockhardt's investment in real estate essentially involves the land acquired at the Bandra-Kurla commercial complex in suburban Mumbai in order to house the group's corporate headquarters. This land, intended to house the Wockhardt's central office, will allow the company dispose off its present offices scattered over Mumbai.Wockhardt is expected to use only around 35 per cent of these 2,25,000 square ft of the office premises being built.

Parke Davis director joins Wockhardt camp

Parke Davis director and Warner Lambert India chief Girish Rangan will take charge of Wockhardt's domestic marketing operations. Khorakiwala confirmed Rangan's appointment even while he did not rule out an intent to pursue a Nasdaq listing in the "medium term".

"Wockhardt is not looking at a private placement, or a Nasdaq listing in the immediate future, but in the medium term we may pursue the latter," he said. An analyst with a leading stock broking firm said that Wockhardt's latest move will help it tap the private-placement market and also attract major FI investment, given its pure pharmaceuticals thrust.