Wednesday, April 1, 2009

Wockhardt tumbles on liquidity crisis

Wockhardt tumbled 14.15% to Rs 73.30 at 13:08 IST as the drugmaker sought to restructure its debt and said it is evaluating a recast of certain businesses and units, suggesting a liquidity crunch.
The stock hit a high of Rs 80 and a low of Rs 68.45 so far during the day. The stock had a 52-week high of Rs 323 on 21 May 2008 and a 52-week low of Rs 67.50 on 13 March 2009.
India's seventh largest pharma company by revenues has an equity capital of Rs 54.72 crore. Face value per share is Rs 5.
The current price of Rs 73.30 discounts the company's Q3 December 2008 annualized EPS of Rs 4.91, by a PE multiple of 14.92.
Wockhardt said it is facing problems in servicing its debt and will undertake a corporate debt restructuring exercise, for which it has roped in ICICI Bank. The firm's promoter Habil Khorakiwala resigned as managing director (MD) on Tuesday, 31 March 2009, but will continue as executive chairman. His son, Murtaza will be the new MD.
The company said it is looking at restructuring its certain businesses and subsidiaries, due to which it has delayed declaring the financial results of the fiscal year ended 31 December 2008. The audit of the annual accounts of the company for the financial year ended December 2008 would be completed by 25 April 2009.
The company's market capitalisation of Rs 936 crore is tiny compared to its debt burden of over Rs 3,000 crore. There is also intense speculation that the company has incurred substantial mark-to-market losses because bets on forex derivatives had gone wrong.
Although the exact quantum of the alleged mark-to-market loss could not be ascertained, media report estimated it between $150 million to $300 million.
The firm will reportedly need substantial infusion of equity by selling subsidiaries, assets or by inducting a strategic partner in the parent company.
Wockhardt's debt stood at Rs 3,777 crore as of 31 December 2008. The company would have to repay Rs 2,370 crore in two years, with about Rs 1,324 crore coming up for repayment in calendar 2009.
Earlier some reports had suggested that French pharma major Sanofi Aventis has had prliminary talks with the promoters of Wockhardt for a possible buy out.
On Tuesday, 31 March 2009, a newspaper report had indicated that Ranbaxy Group's Fortis Healthcare had emerged as a front-runner to acquire a 74% stake in unlisted Wockhardt Hospitals for close to Rs 750 crore.
Wockhardt's net profit declined 77% to Rs 13.43 crore on 20.9% fall in net sales to Rs 416.83 crore in Q3 December 2008 over Q3 December 2007.
Wockhardt specializes in the production of pharmaceuticals in both generic and prescription forms. The company has develop brands in a variety of segments, including anti-infectives, pain & inflammation, cough, psychiatry, medical nutrition, vaccines, active pharmaceutical ingredients and bio-technology.

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