Dabur India on Monday filed its scheme of demerger of the pharma and MNC businesses in the Delhi high court, after its board of directors approved the proposal at a meeting last week.
As per the proposal, a swap ratio of 1:2 has been proposed, which means one pharma share for every two Dabur India Ltd share held, Dabur India said in a statement in New Delhi.
According to the details filed, the company proposes to transfer assets of Rs 214 crore (Rs 2.14 billion) pertaining to the pharma business of its total asset base of Rs 521 crore (Rs 5.21 billion) to Dabur Pharma Limited as part of the demerger.
Also, once the proposal is approved, the company plans to list Dabur Pharma on the stock exchanges.
"The demerger would allow investors to benchmark performance of these two entities with their respective industry standards. The pharmaceutical entity would be listed on the stock exchanges and the shareholding pattern of this new entity would be the same as that of Dabur India," group director P D Narang said.
According to Saloman Smith Barney Research, "demerger of the consumer and pharmaceuticals business is a value-enhancing move. We expect a re-rating and believe the sum of parts value will be higher than the current value of the stand-alone entity".
As per the demerger process, the company needs to seek approvals from its creditors (both secured and unsecured) and the shareholders and provide these to the court for a decision.
The statement said Dabur has already got clearances from some secured creditors including HDFC Bank, PNB, SBI, United Bank of India and IDBI Bank. The entire demerger process is expected to be completed by October this year.
After the demerger is complete, the FMCG business will remain with Dabur India and it will concentrate on its core competencies including personal care, health care and ayurvedic specialities.
The new pharma company will focus on expertise in allopathic, oncology formulations and bulk drugs.