Upfront

Ranbaxy de-merges R&D

Our News Bureau - Mumbai

Ranbaxy Laboratories cleared the de-merger of it's new drug discovery research (NDDR) unit into a subsidiary, Ranbaxy Life Science Research (RLSRL). The de-merger will result in cost savings of approx-imately $25 million this year, which is likely to increase significantly in coming years. Speaking on the occasion, Malvinder Mohan Singh, CEO and MD, Ranbaxy, said, "The de-merger of our NDDR unit into a separate entity establishes a robust structure to carry out path breaking research at the cutting edge of modern medicine. It will also enable RLSRL to create intellectual property at a faster pace while positioning it for the future." Under the scheme, shareholders of Ranbaxy will receive one Rupee one equity share of RLSRL, without any payment for every four equity shares of Rs 5 each held in Ranbaxy, as on the record date, to be fixed for this purpose, after receipt of requisite approvals. All assets, liabilities, research personnel and pipeline related to the NDDR unit will be transferred to RLSRL. The appointed date for the scheme to come into effect after receipt of all the requisite approvals is January 1, 2008.

Ranbaxy has subscribed to redeemable preference shares of RLSRL aggregating Rs 200 crore, to meet its business needs. Post de-merger, equity capital of RLSRL will be approximately Rs 12.6 crore. Ranbaxy and RLSRL employees' welfare fund trust will respectively hold 19.8 percent and 4.9 percent, while balance will be held by Ranbaxy shareholders. It is proposed that RLSRL equity shares will be listed on both the National and Bombay Stock Exchanges while Global Depository Receipt (GDRs) will be listed on Luxembourg Stock Exch-ange. All approvals required for the scheme, including that of the Punjab and Haryana High Court, are expected in the second half of 2008.