Bajaj Healthcare Ltd announces sale of unit

Bajaj Healthcare Limited (BHL), a leading manufacturer of APIs, Intermediates and Formulations, in its board meeting held on 28th June, 2023, has considered and approved for the sale/disposal of an undertaking/unit(s) situated at Plot No. N 92, L-9/3 & T-30, MIDC, Tarapur, Taluka Boisar, District Palghar, Maharashtra and Vacant Industrial Land situated at Plot no D-2/CH/42 & D-2/CH/43 Dahej Industrial Area, GIDC, Bharuch, Gujarat (which were acquired under SARFAESI Act 2002 from Saraswat Bank) and Plot No. E-62 and E-63 MIDC Tarapur, Taluka Boisar, District Palghar, Maharashtra, subject to approval of shareholders.

BHL had acquired the property situated at Plot No. N 92, L-9/3 & T-30, MIDC, Tarapur, Taluka Boisar, District Palghar, Maharashtra and Vacant Industrial Land situated at Plot no D-2/CH/42 & D-2/CH/43 Dahej Industrial Area, GIDC, Bharuch, Gujarat under SARFAESI Act 2002 from Saraswat Bank at around October, 2020 and also acquired Plot No. E-62 and E-63 MIDC Tarapur, Taluka Boisar, District Palghar, Maharashtra in February, 2020.

The objectives behind acquiring the said units was to take advantage of the capacities available to expand the existing product portfolio of the company as well leverage the products already manufactured in such manufacturing units. The company also wanted to start some new products in said units to expand the products offerings to the domestic as well overseas markets. The company started preparing the said units for getting permissions from the regulatory authorities for new products, carryout changes to implement efficiency & productivity in the operations, attempted to reduce the cost of operational activities to improve the margins in the business.

BHC's operations in the acquired unit were focused on manufacturing the existing products and new products with more cost efficiency was defeated due to getting delay in the approvals of various regulatory permission, not able to amend processes for the products already manufactured in the said units, modification of facility to make suitable for new products suitably due to space constrains, etc.

Therefore, the management recommended the board to explore the opportunity to close the facilities during the current year. As part of the process, the board has evaluated different options for the facility and decided sale/disposal of the aforesaid manufacturing site, with the intention to have discontinued its involvement in operations.

The operations at the said units at Tarapur currently generated a negative annualized EBITDA and after sale/disposal of the said units will enhance an EBITDA margin and profitability improvement in the existing business. Further the proceeds from the sale of such units will be utilised for the repayment of debt raised for acquiring the said units which will help the company to reduce the interest burden, improve the liquidity and positively impact on the company's operations in the current year.

Source : Equity Bulls

Keywords

BajajHealthcare SaleofUnit