Glaxo India chairman Deepak S Parekh told shareholders at the company's annual general meeting on Tuesday that it was not "not worthwhile, at this juncture, to consider a legal merger". This decision is essentially because one Biddle Sawyer facility is currently facing wage disputes and the matter is before the industrial tribunal.

Glaxo managing director, HR Khusrokhan also spelt out the three basic criteria used to zero in on the Biddle Sawyer acquisition. These are:

The net present value of the future free cash flow must exceed the current cost of capital of the acquiring company.

The acquisition should not be earnings diluting over a threeyear period and,

the acquisition must break even in eight years (in the case of Biddle Sawyer, break-even should occur in six years).

While the valuation for the acquisition was done by NM Raiji & Co, the benefits accruing to Glaxo from this acquisition include a product portfolio free from price control, an additional turnover of Rs 40 crore and access to collaborators -- Takeda and Teva's pipeline. The Biddle Sawyer group is expected to achieve a 50 per cent growth in turnover.

On the acquisition of ICI's animal health brands on March 31, 1999, Khusrokhan said that Glaxo paid Rs 16 crore (Rs 17.5 crore with stamp duty) for the deal. The company also has three to four applications pending in the mailbox.

On specific shareholder queries on the possibility of setting up a 100 per cent subsidiary for bringing in new products, Khusrokhan said, if at all this happens, it could possibly be for exports or research. No specific application has, however, been made on this front, he said.

The company alsoplans a capital expenditure of roughly Rs 20 crore during the next three years. Meanwhile, shareholders approved all resolutions including the appointment of Dr PG Hodsman, currently the regional medical director of Glaxo Wellcome Asia Pacific pte, as a director of the company.

Net profit at Rs 13.32 cr

Glaxo India has registered a 4.8 per cent increase in gross sales (5.3 per cent growth in domestic pharmaceutical sales and 11 per cent in exports) in the first quarter ended March 1999 at Rs 184.92 crore. The company expects to maintain sales growth at 14 per cent for this year, barring unforseen circumstances. Profit before tax at Rs 19.97 crore is higher by 15.4 per cent, while net profit stood at Rs 13.32 crore.

Glaxo India chairman Deepak S Parekh said that a bonus issue had not been announced partly due to contingent liability on account of claims under the Drug Price Equalisation account (DPEA). Besides, 60 per cent of the company's drugs fall under the price controlled category and thecompany also suffered a downward revision in the prices of Zinetac, though they were revised subsequently.