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Dr Datsons Labs in talks with strategic investors for stake sale

Mid-sized drug maker Dr Datsons Labs is negotiating with various pharma companies and other strategic investors for a potential stake sale in company to fuel its expansion plans, as per a stock market disclosure.

The firm did not disclose the names of the prospective buyers who could pump in money into the firm through a preferential allotment of securities. However, media reports have suggested Videocon Group is looking at a controlling stake.

Earlier on Wednesday, the Business Standard reported that Videocon Group is looking to acquire an additional stake in the public listed firm. It added that during the quarter ended March 31, 2014, Videocon, through its subsidiaries, increased its holding in Dr Datsons to 19 per cent from 9 per cent in the previous quarter.

Its promoters’ holding shrank to just 10 per cent as of March 31, 2014 compared with 24.8 per cent as of December 31, 2013. Its promoters include Finaventure Capital and Kannan Vishwanath. Almost all of their shares are pledged with financial institutions which makes the firm an easy takeover target.

The report also said citing its promoter and vice chairman Kannan Vishwanath that the firm is looking for capital investment of around Rs 250 crore to fund its expansion plans in Mahad and Pune.

On Wednesday, Dr Datsons’ scrip ended at Rs 36.70 per share on BSE, down 4.43 per cent in a weak Mumbai market. This gives the firm a market cap of just around Rs 116 crore. A capital infusion of the extent envisaged around the current market price would lead to a significant equity dilution and to a single investor would mark a change in management control.

Dr Datsons manufactures active pharmaceutical ingredients (APIs) and finished dosage forms. It also provides contract research and manufacturing services and has a strong presence in the anti-malarial API segment.

For the year ended March 31, 2013 it reported revenues of Rs 520.75 crore with net profit of Rs 0.42 crore. In the quarter ended December 31, 2013 it reported revenues of Rs 150.57 crore with net profit of Rs 1.86 crore.

Videocon Group is largely associated with its consumer electronics business but has business interest in areas such as oil & gas, retail, DTH among other business lines. 

(Edited by Joby Puthuparampil Johnson)

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