Shareholders of the Ajay Piramal group of companies approved the three-way merger of Piramal Healthcare Ltd (PHL) and Boehringer Mannheim India Ltd (BMIL), with Nicholas Piramal India Ltd (NPIL), in separate meetings at the same venue in Mumbai yesterday.
NPIL shareholders also passed special resolutions for hiking the company's authorised capital from Rs 30 crore to Rs 50 crore and for increasing the borrowing limits from Rs 75 crore to Rs 250 crore.
Under the scheme of arrangement worked out last year for the three-way merger, BMIL shareholders will get one equity share of NPIL for every two shares held by them, while PHL shareholders will get three shares of NPIL for every four held by them. PHL warrant holders will get 15 shares of NPIL for every two warrants held by them in the former.
The pharmaceutical division of Piramal Healthcare will exist as a separate division within the NIPL fold while the real estate business has been hived off as Piramal Holdings Ltd. Piramal Holdings will lease around 1,30,000 square metres of land to NIPL at a monthly rent of Rs 1,000 with the lease being renewable at the discretion of NIPL.
In a series of meetings yesterday, the shareholders complimented Ajay Piramal for his decision to merge group company PHL into NPIL and also take over BMIL. They expressed the hope that the company would continue to grow under his guidance. One of the shareholders said "In the coming years, we will see Nicholas Piramal occupy the number two position behind Ranbaxy."
Some shareholders expressed apprehensions over the repercussions of the Comsat Forte episode on the company's future. Piramal said NIPL had been indemnified by Boehringer Mannheim, Germany, against any liabilities. Also, Comsat Forte contributed only Rs 50 lakh to the annual turnover of BMIL and NPIL has a similar product Bactrin to compensate for the loss.
Post merger, NIPL's paid up share capital will go up from Rs 18.42 crore to Rs 27.7 crore. The warrants of Piramal Healthcare are being converted into those of NIPL and every two warrants are convertible into 15 equity shares of NIPL. The warrant conversion can be exercised from December 1997 till December 1999 after which, the company's share capital will rise to Rs 34.93 crore.
NPIL will apply to NSE, BSE and the Ahmedabad Stock Exchange for listing of its shares as provided in the amalgamation scheme. The odd lot shares created as a result of the mergers will be allotted by the board of NPIL to two nominees of the company, which will then be sold and the sales procceds distributed among the shareholders entitled to such fractions.
NPIL has tied up a foreign loan of Rs 60 crore at a rate of 90 basis points over Libor. The loan has been arranged by ING Bank. Mahesh Gupta, chief financial officer of Piramal Enterprises, said the company will use the foreign debt for expansion in the first quarter of next year.
NPIL had earlier planned a Rs 200 crore expansion with Rs 72 crore coming from internal accruals, Rs 60 crore from ECB, Rs 50 crore from surplus funds and Rs 18 crore from non-convertible debentures and private placement of shares.
