Taparia family buys majority stake in Guardian Lifecare

Taparia family, who sold contraceptive maker Famy Care to Mylan for $800 million last year, has acquired a majority stake in pharmacy chain Guardian Lifecare Pvt Ltd that was mired in a legal dispute with its private equity investor Samara Capital.

The deal is valued at Rs 55 crore and the legal dispute between Guardian Lifecare and Samara Capital has been resolved, The Economic Times reported citing people aware of the development.

Guardian Lifecare will now be run by a professional management and Ashutosh Garg, who started the pharmacy chain in 2003, will continue to have a minority stake and hold a board seat, the paper said.

The Taparias, who collectively paid Rs 211 crore in advance tax to the government in 2015-16, were among the highest individual tax payers.

The Gurgaon-based company had first got its external investment from Samara Capital in 2008 when the private equity firm had invested Rs 60 crore for an undisclosed stake in the company's cash-and-carry firm—Guardian Nutrition.

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.

Notably, Samara Capital infused fresh capital of $1.18 million in Guardian Nutrition in July this year. It was not immediately clear whether Samara would be exiting.

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

The pharmacy space 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—including those that enjoy investor backing such as 1MG and NetMeds—steadily make their presence felt, even as regulations around online pharmacies are still murky.

Legal dispute

Samara Capital Partners had filed a winding-up petition against Guardian Lifecare for its alleged non-payments of dues to Guardian Nutrition.

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

Ashutosh Garg had told VCCircle that the matter has been going for a long time now and is being resolved.

The tension 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. 

Samara and Guardian Lifecare were also fighting another legal case over the ownership of the ‘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.

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