Noida-based Jubilant Life Sciences Ltd plans to demerge its pharmaceuticals and life science ingredient businesses as part of its second phase of restructuring.
The company said in a stock-exchange filing that splitting the two businesses into different entities will help unlock shareholder value. It will also help the company to manage different risks, rewards and regulatory requirements.
The company has constituted a committee to evaluate various options for splitting the businesses. However, the final decision will be subject to necessary approvals. It did not provide a timeline for the proposed demerger of the entities.
Jubilant Life Sciences' pharmaceuticals division, through its wholly owned subsidiary Jubilant Pharma Ltd, makes active pharmaceutical ingredient (APIs), solid dosage formulations, radio pharmaceuticals, allergy therapy products and engages in contract manufacturing of sterile injectables and non-sterile products.
It has six US Food and Drug Administration (USFDA) approved manufacturing facilities in the US, Canada and India, including a network of over 50 radio-pharmacies in the US.
The pharmaceuticals segment's revenue rose 12% to Rs 1,321 crore in the quarter ended June from the year-ago period, accounting for 61% of the company's revenue. Its earnings before interest, tax, depreciation and amortization (EBITDA), however, fell to Rs 331 crore during the period as compared with Rs 342 crore in the same quarter last year.
The life science ingredients segment is involved in specialty intermediates, nutritional products and life science chemicals. It has five manufacturing facilities in India.
The life science ingredients division's revenue dropped by 5% to Rs 805 crore during the quarter from the year-ago period, contributing 37% to the company's revenue. The segment's EBITDA, however, rose 11% to Rs 122 crore during the quarter.
This is not the first time the firm is looking to demerge. In December 2010, the company, then known as Jubilant Organosys, demerged its agri and performance polymers business into an independent company called Jubilant Industries Ltd. The demerged entity had a mirror shareholding pattern. However, the promoters’ stake went up following a group restructuring that involved some privately held firms of the promoters.
That demerger left Jubilant Life Sciences as an integrated pharma and life sciences company.
Subsequently in 2013, the company said it was looking to hive off its pharmaceutical business and drug discovery business as two separate subsidiaries of the company. This had happened as part of the first phase of a restructuring to list and raise fresh capital for the pharma business.
The company's drug discovery is categorised under a different segment.