Zenotech Labs to be referred to BIFR

Sun Pharma, Daiichi Sankyo together hold 66.85% shares of the company

The board of directors of Hyderabad-based Zenotech Laboratories Limited, which is now in the hands of Sun Pharmaceutical Industries Limited following the acquisition of Ranbaxy Laboratories by the Indian pharma major, has decided to refer the company to the Board for Industrial and Financial Reconstruction (BIFR).

Sun Pharma and Daiichi Sankyo, the previous owner of Ranbaxy, together hold 66.85 per cent shares in the near-defunct subsidiary, while the previous promoter Jayaram Chigurupati and his family own 23.91 per cent shares.

“As on March 2015, the total net worth of the company has been completely eroded. The board of directors has formed an opinion that the company has become a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act 1985 and necessary reference shall be made to the BIFR in due course of time,” Zenotech chairman Vijay Agarwal said in a filing to the stock exchanges.

In 2007, Ranbaxy took control of the company by enhancing its equity holding to 45 per cent for a consideration of over Rs 200 crore as it wanted to expand its product portfolio by acquiring this biopharmaceutical company. However, in the subsequent years, there was an ugly spat erupted between the previous promoter and the new owner of the company with Jayaram Chigurupati filing a case against Ranbaxy accusing it of criminal breach of trust soon after Daiichi acquired Ranbaxy.

Further in June last year, some petitioners, claiming to be the minority shareholders of Zenotech, approached the AP high court and got interim orders, though lasted only for a brief period, against the Sun-Ranbaxy merger.

During the fourth quarter ended March 2015, Zenotech has reported a net loss of Rs 10.70 crore, as compared with a net loss of Rs 2.6 crore in the corresponding quarter. Revenues for the quarter under review stood at just Rs 89.12 lakh.

The books of records, supplementary documents and statutory registers up till November 12, 2014, are still not in the possession of the company though the Company Law Board in October 2012 had directed Jayaram Chigurupati to return all the documents and provide written details of all missing documents assets etc of the company, according to the filing. The total equity and liabilities of the company were shown as Rs 63.71 crore as at March 2015.