Lupins Search For Foreign Partner Fails Yet Again

The Rs 642-crore Lupin Labs has, for the second time, failed in its attempts to find a foreign partner due to differences over pricing.

Top industry sources say talks between the promoters of Lupin Labs and Donaldson Lafkin & Jenvette Inc (DLJ), a US investment bank, fell through as there was a difference of at least 25 per cent between the price demanded by the promoter and the one offered by DLJ.

DLJ is an integrated investment bank with asset management and brokerage activities, along with securities operations. It has a market capitalisation of $4.6 billion. It recorded a profit of $408 million for the year ended December 1997.

 

Currently, promoters hold a 75 per cent stake in Lupin Labs, with foreign holding in the companys Rs 24.23-crore equity being a negligible 0.02 per cent.

An earlier attempt to sell a 10 per cent stake to EM Warburg Pincus & Co, the US fund, had also failed as a mutually acceptable price could not be worked out. Warburg Pincus holds a five per cent stake in Ajay Piramals Nicholas Piramal.

Industry sources said D B Gupta, Lupin Labs chairman and managing director, is looking to sell 10 to 15 per cent of his stake in Lupin Labs in order to repay loans taken by group subsidiaries from Lupin Labs. Most of these subsidiaries are private companies owned by the Gupta family.

During 1996-97, advances by Lupin Labs stood at Rs 84 crore and deposits at Rs 72 crore. Its own debts stood at Rs 362 crore including working capital loans of Rs 119.68 crore. Consequently, the interest burden has been substantial