PE firm Samara files winding-up petition against pharmacy chain Guardian

Samara Capital Partners has filed a winding-up petition against Gurgaon-based Guardian Lifecare Pvt Ltd, which runs a retail chain of health and wellness stores, for its alleged non-payments of dues to an associated firm.

The petition was filed last month in Delhi High Court and court records accessed by VCCircle shows that the next hearing date is May 11.

The dues pertain to cash-and-carry or wholesale supply company Guardian Nutrition that is now owned by the private equity firm. Foreign investment in wholesale retail firm is allowed but barred in front-end retail. Retail firms have formed two-tiered structures that allow them to legally circumvent this ban.

In such structures, the front-end retail firms are legally owned by Indian promoters while its back-end supply chain is controlled by firms that are either wholly or partly owned by foreign investors. 

The Economic Times that first reported the development said the dues are worth Rs 123 crore for supplies and loans extended to it.

Guardian Lifecare's Ashutosh Garg told VCCircle that the matter has been going for a long time now and is being resolved. "There is nothing to worry about it," he added. An email sent to Samara did not elicit any response.

In 2008, Samara had invested Rs 60 crore for an undisclosed stake in the cash-and-carry company.

The newspaper citing legal documents said that tensions between the two parties arose after Guardian Lifecare's mounting losses forced it to borrow money from Guardian Nutrition and was unable to pay back, while Garg was miffed after Samara started directly managing the retail chain as well. 

"There is literally hundreds of mails that will establish beyond any doubt that Samara has interfered in the operation of the Guardian since 2009 and exercised complete control over the management of the company from April 1, 2012," said Garg according to court papers while acknowledging the loans it owes to Samara.

Samara and Guardian Lifecare are also fighting another legal case over the ownership of ‘Guardian’ brand name and royalty payments.

Samara Capital was founded by Sumeet Narang, who had earlier worked with Citigroup India across various functions based out of Delhi and Hyderabad, in late 2006. Its portfolio from the healthcare sector also includes Mumbai-based medical consumables maker Lotus Surgical Specialities Pvt Ltd.

Guardian Lifecare was founded in 2003. Following Samara's investment in 2008, the company had attracted Rs 80 crore from private equity arm of Japanese conglomerate Mitsui Corp. The company was also looking to raise fresh funding in early 2014.

The pharmacy business is highly fragmented in the country with millions of standalone chemists. Other PE-backed players in the industry include MedPlus and Wellness Forever.

The market is expected to face more disruption as online pharmacies some with investor backing like 1MG and NetMeds steadily make their presence felt, even as regulations around online pharmacies are still murky.

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