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Another Piramal trademark is mergers & acquisitions (M&A) and there is unlikely to be any letting up in the pace of acquisitions. Last fortnight, NPIL pulled off yet another transaction, by acquiring a manufacturing facility of Pfizer in the UK for an undisclosed amount. Piramal hopes to gen...

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Bibliographic Details
Published in:Business today (New Delhi, India) India), 2006-12, p.62-72
Main Authors: Mukherjee, Amit, Adhikari, Anand, Lath, Shivani, Gopalan, Krishna
Format: Magazinearticle
Language:English
Subjects:
Ambani, Anil
Balance sheets
Banking
Costs
Domestic markets
Equity stake
Exports
Family owned businesses
Foreign investment
Gupta, Sanjay
Initial public offerings
Leahy, John
Market penetration
Nangia, Vasant
Net losses
Pharmaceutical industry
Predatory pricing
Puri, Ratul
REITs
Retail stores
Securities regulations
Steel production
Stock exchanges
Wages & salaries
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Summary:Another Piramal trademark is mergers & acquisitions (M&A) and there is unlikely to be any letting up in the pace of acquisitions. Last fortnight, NPIL pulled off yet another transaction, by acquiring a manufacturing facility of Pfizer in the UK for an undisclosed amount. Piramal hopes to generate revenues in excess of $200 million (Rs 920 crore) from custom manufacturing because of this deal. Among other significant acquisitions made last year were those of Avecia Pharmaceuticals in the UK and Torcan Chemical in Canada, with an annual turnover of roughly $70 million (Rs 322 crore) each. Avecia was in the red when acquired, and Piramal expects it to break even in the current year. Piramal is particular about not paying too much for what he buys. "Most companies are paying several multiples of turnover but our acquisition multiple is 0.3 times of sales on average." He explains that the capital employed for companies he's bought is limited and therefore in the long-term the returns will be attractive. Also, these have opened doors to NPIL in terms of establishing close associations with the top pharma companies in the world. "We have very close relationships with eight of the top 10 pharmaceutical firms in the world," he adds. Those associations will come handy in bolstering his presence in the domestic market. Along with the DOT, ITI also took a huge hit. Sales were down by almost half in just two years-from Rs 2,317 crore five years back to Rs 1,257 crore two years later. With accumulated losses of Rs 1,800 crore in 2005, ITI was stretchered to the Board for Industrial & Financial Reconstruction. Mercifully the Centre infused funds to the extent of Rs 1,024 crore over the last two years (it has happened in tranches). Admits Pandey: "When I took over in May 2003, things looked bleak. Since then we have tried to turn things around." The infusion of Rs 1,024 crore helped the company repay Rs 388 crore worth of bank loans, as well as settle provident fund dues of Rs 93 crore and VRS payments of around Rs 220 crore. It also allowed ITI to splurge Rs 150 crore on capital expenditure and enhance its equity base by Rs 200 crore. The company has on hand an order book of around Rs 2,000 crore mainly from MTNL and BSNL. An additional order for 15.5 million lines from BSNL valued at around $1.6 billion (Rs 7,360 crore) is in the pipeline. Government policy mandates that a third of the 45.5 million lines, $4.8 billion (Rs 22,080 crore) order from the state-owned firm ha
ISSN:0974-3650