Nicholas Piramal to de-merge its new chemical entity research unit

31 August 2007

Pharmaceuticals producer Nicholas Piramal India Ltd will de-merge its new chemical entity (NCE) research unit into a separate company to which Nicholas Piramal will contribute Rs5 crore as capital for an 18-per cent stake in it.

Piramal says the demerger will also facilitate bringing in strategic or financial investors in future who may wish to invest directly in the research units the NCE research programme.

Under the proposed demerger, the NCE unit, with net assets (at book value) inclusive of Rs95 crore collected by a rights issue in 2005 to finance research, will be transferred by Nicholas Piramal to the new company by 1 April 2007, the date when the demerger becomes effective.

The new company will issue fully paid up equity shares aggregating Rs21 crore to the shareholders of Nicholas Piramal in the ratio of one equity share of Rs10 for every 10 equity shares of Rs2 each that they held in the company.

After the de-merger, Nicholas Piramal would hold 18 per cent of the equity capital of the new research company, with the remaining 82 per cent being held by the shareholders of Nicholas Piramal.

The new company is proposed to be listed on the BSE and the NSE and after the listing, at an appropriate time, will explore various options for raising further funds to meet its business requirements.