Ind Swift Labs tanks 16% on selling API business to PI Industries

PI Ind said the purchase consideration of Rs 1,530 crore will be paid in all-cash and funded from the proceeds of the completed QIP and internal accruals

Shares of Ind Swift Laboratories slipped 16 per cent to Rs 95 on the BSE in intra-day trade on Monday after the company announced slump sale of the Active Pharmaceuticals Ingredients (API) business division on a going concern basis to PI Industries at an agreed enterprise value of Rs 1,530 crore.

As of March 31, 2021, the turnover/revenue of the API business division was at Rs 856.58 crore, which constituted 100 per cent of the company's consolidated turnover/revenue for the full financial year. The net worth of the API business division was Rs 298.99 crore as of March 31, 2021.

The rationale for slump sale is to raise funds to facilitate repayment of all existing debt exposure of the company and making the company debt-free. The company will utilise the surplus funds for strategic acquisitions/investments to enhance the stakeholder’s value in long run, it said. The slump sale is subject to receipt of requisite approvals including that of the shareholder of the company, it added.

PI Industries, in a separate regulatory filing, said it is aiming to create a differentiated position in the pharma sector by leveraging its core competencies in complex chemistry, operational excellence, technology platforms and global reach through partnership with large innovators.

The purchase consideration will be paid in all cash and funded from the proceeds of the completed Qualified Institutional Placement (QIP) and internal accruals. The transaction is expected to be earnings accretive with immediate effect. The consummation of the transaction and integration into the corporate structure of PI is expected to be completed during Q3FY22 subject to fulfilment of customary closing conditions and regulatory approvals, the company said.

At 09:56 am, PI Industries traded 4 per cent higher at Rs 3,054.80 after hitting an intra-day high of Rs 3,089 on the BSE. The stock of Ind-Swift Labs was down 13 per cent at Rs 98.75 around the same time. In comparison, the S&P BSE Sensex was up 0.60 per cent at 52,901 points.