Drug maker Wockhardt Ltd. (532300.BY) Friday said the company is looking to sell its animal healthcare business in a bid to raise money to retire its debt, and it expects a debt-restructuring exercise to help tide it over a liquidity crunch.
"The passage of this (corporate debt-restructuring exercise) in the coming few months will ensure enough liquidity for operations and mitigate most of our current issues, which in turn will facilitate our planned growth," Wockhardt Chairman Habil Khorakiwala said in a statement.
Wockhardt last month opted for the debt-restructuring exercise to cope with a debt burden resulting from several overseas acquisitions. The global economic downturn also has hampered efforts to raise fresh funds needed to repay existing debt and finance ongoing operations.
The company informed the stock exchanges that it was looking to sell its animal health-care business, but didn't elaborate.
In announcing the debt-restructuring exercise last month, the company also said it was looking at restructuring some of its businesses and units. It also had postponed its results for the fourth quarter and financial year ended Dec. 31 because the audit couldn't be completed in time.
Wockhardt reported a consolidated net loss of 202.4 million rupees ($4.1 million) for the first quarter ended March 31, compared with a net profit of INR509 million a year earlier.
The results missed market expectations. Mumbai-based Angel Broking had forecast a net profit of INR756 million.
The company said the loss resulted from provisions for mark-to-market losses of INR320 million on its foreign-currency liabilities and hedges.
The Indian rupee fell 4% against the U.S. dollar during the quarter and, at the end of March the local currency was trading almost 21% below its year-earlier level.
The weaker rupee has made the servicing of overseas loans costlier for Indian companies, which are expected to make provisions for losses on open foreign-currency hedges.
Wockhardt, which gets 73% of its revenue from international operations, had hedged part of its foreign-currency exposure to protect its revenue in rupee terms when the local currency was appreciating and trading around 40 against the dollar in late 2007 and early 2008. The rupee is now trading around 50 against the dollar.
Khorakiwala said the meltdown in the global markets and the consequent currency volatility led to mark-to-market losses that had a "marked impact on our bottom line."
Consolidated net sales for the January-March period rose 11% to INR8.69 billion from INR7.86 billion.
For the year ended Dec. 31, the company reported a consolidated net loss of INR1.39 billion, compared with a net profit of INR3.86 billion a year earlier. The company recorded foreign-exchange losses of INR5.81 billion for the year. Consolidated net sales rose 35% to INR35.93 billion.
Khorakiwala said the company was "taking significant management initiatives" toward containing foreign-exchange losses during the current financial year, but didn't elaborate.
Wockhardt, which had net debt of around INR34 billion ($680 million) on Dec. 31, had raised $250 million in foreign currency debt from Indian banks' overseas branches. The company's debt includes foreign currency convertible bonds valued at $150 million, which are due for redemption in October this year. ...
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