Aurobindo ends JV with Citadel

Hyderabad-based Aurobindo Pharma today informed the Bombay Stock Exchange (BSE) that the company has terminated with immediate effect its 50:50 joint venture agreement with Chennai-based Citadel Fine Pharmaceutical Limited in Citadel Aurobindo Biotech Limited.

Srinivas Lanka, director of Aurobindo Pharma, said the company's increased focus on regulated markets besides losses being incurred by Citadel Aurobindo Biotech in each successive year had led to the decision in favour of withdrawing the rights under the JV agreement.

Citadel Aurobindo, which is into trading and distribution of medicines, was formed with Rs 2 crore equity in which Aurobindo holds 50 per cent.

Though the company has terminated the joint venture agreement, its equity will remain with the JV in the form of an investment in the company, according to Srinivas. "In case the company turns around, we will still be in a position to benefit out of that," he said.

The decision will enable Aurobindo to focus more on its core business and will also result in improved EPS, he added. In its communique, Aurobindo maintained that its termination has no significant effect on the revenues of the company.