The Hindu Business Line : Ranbaxy to raise $1.5 b, list on US bourses

PHARMACEUTICAL companies are building war chests to fund their growth plans. The board of Ranbaxy Laboratories Ltd today gave a blanket approval for raising resources up to $1.5 billion through appropriate securities such as foreign currency convertible bonds (FCCBs), global depository receipts (GDRs), american depository receipts (ADRs) and/or any other appropriate security/instrument from time to time.

Besides this, the company has received approval to borrow up to Rs 5,000 crore in excess of its paid-up share capital and free reserves.

It is also planning to increase the authorised share capital from Rs 200 crore to Rs 300 crore as well as hike FII holding up to 50 per cent of the share capital.

The board has also given its nod for listing its shares at a stock exchange in the US either through conversion of the existing GDRs into ADRs and/or through issuance of fresh security/instrument.

According to analysts tracking the sector, today's announcements indicate that the company has some large acquisitions in mind.

"The company has announced intentions of raising over $2.5 billion through a mix of equity and debt, which is larger than the revenue target of $2 billion by the end of 2007 fixed by the company," said a Mumbai-based analyst.

He further said that the company could look at augmenting its equity base through an ADR issue followed by raising revenues through debt. "Raising fresh equity will enable the company to improve its balance sheet. This will enable it to take on additional debt," he added.

Ranbaxy has been talking about both organic and inorganic growth. "With price erosions in the US impacting its revenues, inorganic growth through acquisitions would be a good option," said the analyst. Also, the company's plans of listing its stock in the US market will enable it to widen its international investor base.

"After infotech companies, pharma companies will be looking at going in for ADRs. Currently, Dr Reddy's Ltd is listed on the American bourses and we expect some of the larger generic companies to also tap the US stock markets," said the analyst.

The company will convene an extraordinary general meeting on October 21 for seeking necessary approvals.

It is also seeking consent through postal ballot for divestment of its allied businesses portfolio comprising fine chemicals, animal healthcare business and diagnostic business.

Ranbaxy's share took a beating at the Bombay Stock Exchange. It closed at Rs 525.80 a share, down 2.67 per cent.

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