Wockhardt shareholders reject proposal to raise Rs 1,600 cr from promotor

The board of Mumbai-based drug firm had sought shareholder approval for a related party transaction with Khorakiwala Holdings and Investments to raise up to Rs 1,600 crore for a period of 5 years

Shareholders of Wockhardt have rejected a proposal to raise Rs 1,600 crore from a promoter entity, according to a regulatory filing.

The board of Mumbai-based drug firm had sought shareholder approval for a related party transaction with Khorakiwala Holdings and Investments Pvt Ltd (KHIPL) to raise up to Rs 1,600 crore for a period of five years.

KHIPL, a promoter entity, is an RBI registered NBFC.

About 50.12 per cent votes came in against the proposal while 49.87 per cent of the votes polled favoured the resolution, Wockhardt said in a regulatory filing.

In a note, proxy advisory firm IiAS said it had sought approval for the proposal but it was defeated.

"Wockhardt's resolution for a related party transaction with Khorakiwala Holdings and Investments Pvt Ltd (KHIPL) for an amount up to Rs 1,600 crore for a period of five years, was defeated," it noted.

IiAS said the proposed related party transaction with KHIPL was intended for borrowing of funds for an amount up to Rs 1,600 crore for a period of two years renewable by mutual consent, subject to ratification by members at least once in every five years, IiAS said.

Supporting the proposal, the proxy advisory firm had stated that in order to meet its various operational and cash flow requirements on short notice, Wockhardt requires additional funds which KHIPL can provide through given its nature of business.

Shareholders, however, approved a proposal to raise up to Rs 1,600 crore through a qualified institutions placement (QIP) to eligible investors through an issuance of shares or other eligible securities.

Wockhardt is looking to turnaround its business operations with restructuring of the US business, vaccine tie-up with Serum for vaccine manufacturing in the UK among others.

The drug firm reported last week that its consolidated loss after tax widened to Rs 136 crore in the June quarter due to higher expenses.

The company had posted a consolidated loss after tax of Rs 75 crore in the April-June quarter a year-ago.