Aarti Industries board okays demerger of pharma unit; shareholders get 1 share for every 4 they own

Aarti Industries board okays demerger of pharma unit; shareholders get 1 share for every 4 they own

Did you Know? Stock score of Aarti Industries Ltd moved up by 1 in a month on a 10-point scale. View Latest Stock Report »

NEW DELHI: The board of directors ofhas approved the demerger of Aarti Industries, carving out Aarti Pharmalabs, which will house its pharma business along with specialty chemicals related to the pharma sector.The company on Thursday said the demerger will also result in Aarti Industries Limited and Aarti Pharmalabs Limited achieving operational efficiencies by streamlining of the relevant businesses.Shareholders of Aarti Industries will get one share of Aarti Pharmalabs for every four shares they hold. The record date for the scheme is yet to be announced.“The demerger will enable the Aarti Pharmalabs to expand its presence in the fast moving pharma business in India and abroad.It will result into two dedicated and focused business segments i.echemical and pharma without any risk or overlap of one business over the other,” said the company.The demerger is subject to requisite approvals of the National Company Law Tribunal , BSE, National Stock Exchange of India Securities and Exchange Board of India and other statutory/regulatory authorities, including those from the shareholders.For FY21, Aarti Pharmalabs contributed 19.8 per cent of total revenue for Aarti Industries. In the June quarter, the share stood at 18.4 per cent. Aarti Industries said the part of the specialty chemical business that is going to its pharma unit accounts for less than 3 per cent of the revenues of the speciality chemical business.The public and promoter shareholding for both companies will remain the same. Currently promoters hold 44.90 per cent in Aarti Industries and public shareholders hold 55.10 per cent.The Board seeks to list Aarti Pharmalabs on BSE and NSE post demerger.On Wednesday, shares of Aarti Industries ended up 0.50 per cent at Rs 957.10 on BSE. In the last one year, the stock has returned about 88 per cent.

Aarti Industries demerger of pharma unit: What it means for investors

Aarti Industries on Thursday announced that its board of directors at a meeting held on August 19 have approved to demerge pharma business to Aarti Pharmalabs Ltd. Shares of Aarti Industries were trading more than 3% lower to ₹927.95 per share on the BSE in the first half of Friday’s trading session.

“The board approved to restructure the business of the Demerged Company by way of a Scheme of Arrangement whereby the Pharma Business and allied activities of Aarti Industries Limited (demerged company) will be demerged into Aarti Pharmalabs Limited (Formerly known as Aarti Organics Limited), a wholly owned subsidiary Company of Aarti Industries Limited (the resulting company)," it said in an exchange filing.

The demerger will result in Aarti Industries and Aarti Pharmalabs achieving operational efficiencies by streamlining of the relevant businesses, the company said while explaining the rationale for demerger. It will result into two dedicated and focused business segments i.e., Speciality Chemical and Pharma without any risk or overlap of one business over the other.

Shareholders of Aarti Industries Limited, pursuant to the demerger, will get equity shares of resultant company for the value of business transferred in the manner set out under this scheme.

Aarti Industries shareholders will get one share of Aarti Pharmalabs for every four shares they hold in Aarti Industries. The record date for the scheme is yet to be announced.

The shares will be issued by the resulting company in the same proportion (on the basis of Share Entitlement Ratio) in which shareholders hold the shares in the demerged company, subject to receipt of regulatory approvals.

Santosh Meena, Head of Research, Swastika Investmart said that the company is going to unlock value for its shareholders while the ratio is not very encouraging therefore “we saw a muted reaction in the stock price today but its both vertical are doing very well." The pharma business has EBIT margins of 23% and has been growing at a CAGR of 20% for the past 5 years. “The overall view is bullish for both the verticals therefore investors should hold the stock and take benefit of value unlocking,” Meena added.

Technically, 920-900 is a strong demand zone for the counter while 980-1000 is an immediate supply zone; above this, we can expect a rally towards the 1100 level.

The company said it will make an application to the stock exchanges BSE and NSE to list Aarti Pharmalabs post demerger.

Aarti Industries Limited (AIL) is a leading Indian manufacturer of speciality chemicals and pharmaceuticals with a global footprint.

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Stocks in Focus on August 17: Sugar Stocks, Indiabulls Real Estate, Aarti Industries, Lupin to Delta Corp; here are the 5 Newsmakers of the Day

Benchmark equity indices surged to fresh record highs amid gains in RIL, Tata Steel and financial stocks on Monday, August 16, 2021. The headline indices, the S&P BSE Sensex and Nifty 50 touched a fresh high of 55,680.75 and 16,589.40 in the intraday trade today. The S&P BSE Sensex closed 145.29 points or 0.26 per cent higher at 55,582.58. Similarly, the Nifty 50 index closed 33.95 points or 0.21 per cent higher at 16,563.05. But certain stocks came in the news after the market was closed. These stocks can impact the indices when it reopens on Tuesday, August 17, 2021. List of such five stocks:

See Zee Business Live TV Streaming Below:

Sugar Stocks: Sugar stocks will be in focus today raw sugar price has reached to 4.5 years high due to a fall in supply, which is impacted due to reduced production in Brazil. Besides, the Indian Sugar Mills Association (ISMA) has written to the Prime Minister’s Office (PMO) to immediately increase the Minimum Sale Price (MSP) of sugar from the current Rs 31 per kg to at least Rs 34-35 per kg to help it clear the pending sugarcane dues ahead of the new crushing season that will start from October 2021.

Indiabulls Real Estate: Company has filed the requisite joint application with the jurisdictional bench of NCLT, for its approval to the Scheme of Merger. Earlier, the company received Competition Commission of India’s (CCI’s) approval for a merger of NAM Estates Private Limited (“NAM Estates”) and Embassy One Commercial Property Developments Private Limited (Embassy One”), both Embassy group entities with Indiabulls Real Estate Limited.

Aarti Industries + Lupin

Aarti Industries: The Board of Directors of the company is scheduled to meet on August 19, 2021, to consider and approve the Scheme of Arrangement (‘Demerger’) and any other matter incidental thereto.

Lupin: Global pharma major Lupin Limited has received tentative approval from the United States Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) Brivaracetam Tablets, 10 mg, 25 mg, 50 mg, 75 mg, and 100 mg, to market a generic equivalent of Briviact® Tablets, 10 mg, 25 mg, 50 mg, 75 mg, and 100 mg, of UCB Inc. This product will be manufactured at Lupin’s Nagpur facility in India. Brivaracetam Tablets are indicated for the treatment of partial-onset seizures in patients four years of age and older. Brivaracetam Tablets (RLD: Briviact® Tablets) had estimated annual sales of USD 311 million in the U.S. (IQVIA MAT June 2021). Besides, Lupin, reportedly, has plans to enter the Chinese market. The company is looking for a manufacturing partner in the Chinese market as it has plans to launch certain respiratory products in the country.

Delta Corp: The Government of Sikkim has allowed the reopening of the Casinos in the State. The Company and/or its subsidiary operating the Casino in the state of Sikkim will resume its operations from August 16, 2021, and will follow all the safety norms laid down by the state in this regard.

Bulk Deals + Insider Trades

Bulk Deals

Windlas Biotech: ICICI Ltd trading A/C sold 1,22,350 shares at Rs 417.62/share.

Krsnaa Diagnostics: Birla Sun Life Insurance bought 230,000 shares at Rs 1023.34/share.

Exxaro Tiles: Morgan Stanley Asia Singapore PTE sold 2,54,380 shares at Rs 127.07/ share. Plutus Wealth Management LLP sold 2,57,235 shares at Rs 127.67/share.

Spencers Retail: Welspun Multiventures LLP bought 5,21,565 shares at Rs 104.5/share.

Insider Trades

Sudarshan Chemical Industries: Promoter Rahul Rathi sold 7.5 lakh shares (1.08%) Via Open Market. Total holding falls from 6.87% to 5.79%.

Lincoln Pharmaceuticals: Promoters bought 50,000 shares.