Templeton to buy Aurobindo shares

Mumbai: With Templeton Emerging Markets, an investment arm of the US-based Franklin Templeton, deciding to acquire about 9 per cent in its equity, Aurobindo Pharma may go slow on looking for a buyer for the remaining 1.5 million shares it planned to offer through the private placement route.

Templeton will be picking up 1 million equity shares and 1 million share warrants in Aurobindo at a price of Rs 226 per equity share and warrant. The warrants are to be converted into equity shares within 18 months' time, but Aurobindo expects Templeton to opt for the conversion in four months.

Simultaneously, Aurobindo's promoters, including chairman P V Ramaprasad Reddy and managing director K Nityananda Reddy will be acquiring 1 million equity shares and 1 million share warrants at Rs 226 per share. The promoters have decided on the investment to maintain their share percentage of 65.12 per cent in the company's equity. Aurobindo now has a paid-up equity base of Rs 20.2 crore.

"With the investment by Templeton and the promoters we expect to have Rs 90.4 crore for our expansion and restructuring programme, which is currently under way. As we have time till 16 April to complete the private placement, we hope the valuations will improve by then, so we can get a better price for the 1.5 million shares," says Ramaprasad Reddy. "The entry of Templeton has given us a strong international profile, which will help us when we go for a listing overseas."

Aurobindo Pharma's board had, on 14 December, decided to raise Rs 125 crore through private placement. Reddy says his company's restructuring is on track. "We launched the restructuring in the third quarter of 2000-01, and it is moving as per schedule. We expect our new plant near Visakhapatnam, which will be making bulk drugs disc, to be commissioned in 2002; so will our joint venture plant in China, where we expect to start production by June next year."

The Vizag plant will be manufacturing bulk drugs for semi-regulated markets. As part of the restructuring, two of Aurobindo's plants here have stopped making these bulk drugs.