Ranbaxy okays demerger of drug research unit

The hive-off is likely to save costs of around $25 million for the company in the current year and would help significantly reduce recurring expenses in the coming years. The existing shareholders of Ranbaxy Laboratories would receive one equity share of Re 1 each, without any payment, in the new entity for every four equity shares of Rs 5 held, a company statement said.

The equity shares of the new company are likely to be listed on the National Stock Exchange and the Bombay Stock Exchange while GDRs will be listed at the Luxembourg Stock Exchange, it said. Shares of Ranbaxy Laboratories on Tuesday closed up 4.81% at Rs 415.40 on the Bombay Stock Exchange.

To meet its growing business needs, Ranbaxy Laboratories has already subscribed to redeemable preference shares of RLSRL aggregating to Rs 200 crore. Post hive-off the equity capital of the new entity would be about Rs 12.6 crore. The employees? welfare fund trust of Ranbaxy Laboratories and RLSRL would hold 19.8% and 4.9% of the equity share capital of RLSRL, respectively, while Ranbaxy shareholders would hold the balance.

All assets, liabilities, research personnel and pipeline related to the new drug discovery research unit would be transferred to the new entity. The resulting operational freedom and flexibility (to do R&D for new chemical entities) would also help to open up new growth opportunities besides providing a platform for increased collaboration, the statement added.

?The de-merger of the NDDR unit into a separate entity establishes a robust structure to carry out path breaking research at the cutting edge of modern medicine.?It will also enable RLSRL to create intellectual property at a faster pace while positioning it for the future,? Malvinder Mohan Singh, chief executive officer and managing director Ranbaxy Laboratories Ltd said.