'Global Hospitals is a large player in the niche area of organ transplant'

Dr K Ravindranath

An edited version of this Q&A first appeared in DNA Money edition on Wednesday, August 08, 2012.

Starting operations over a decade ago from Hyderabad, Global Hospitals Group is currently among the fastest growing multi super-specialty tertiary care hospital brands with state-of-the-art healthcare centres in Bangalore, Chennai and soon to open in Mumbai. Dr K Ravindranath, chairman and managing director, Global Hospitals Group, in conversation with Ashish K Tiwari, shares his views about the current scenario in the super-specialty healthcare space and their company’s plans in this direction. Edited excerpts...

 

Could you briefly take us through the journey of Global Hospitals Group? How did it really come into being? 

Global Hospitals was started way back in the year 1999. Basically, I am a gastrointestinal surgeon specialising in laparoscopic, liver and pancreas surgery. My heart lies in liver transplantation. I was in Kings College Hospital, London, UK, where several Indian patients used to come for treatments spending huge money (over Rs 70 lakh). Majority of them would die because of non-availability of organs would be first given to local patients and outside patients would always get second priority.

Over a period of time I realised that something needs to be done back in India to facilitate organ transplant. I decided to come back and since the Transplant Act took really long time to get approved in India I did not do transplant surgeries for several years. But when the Act finally came by, we decided to set up a hospital and that is how Global Hospitals was instituted.

Transplant as an area of specialisation requires dealing with a lot of complexities... 

In fact, transplant is the most complex procedure and requires significant back up from other specialties in addition to lot of cutting-edge technology. And when you put all those things, it has to be utilised properly hence we conceptualised a multi-super speciality tertiary care and multi-organ transplant healthcare services facility. We are a very comprehensive centre of excellence offering everything from routine operations, tests, to complex operations like transplants. 

What are your views on organ donations in India? 

It is a huge challenge. Organ donation has to happen and promoted in India in a big way. It is a regular practice in some of the smaller countries like Spain but there is a huge shortage in our country. Awareness about the need for organ donation has to be created with the people in India. Karnataka is the first Indian state where a declaration is made in the driving license itself that the person has agreed to donate organs post his / her death. This approach is very prominent in foreign countries and I’m told the Tamil Nadu government will follow suit soon. Organ transplant has to be done within 4-48 hours of the death of the donor depending on which organ is being transplanted. Each organ has a limitation on how long can it be kept. 

What factors differentiate the various healthcare services offered by your hospital chain? 

We started the hospital focusing on multi-organ transplant because there was no point in doing just standalone transplants. When doing a liver transplant, one should have a high-end facility with complete gastroenterology, liver, pancreas diseases centre. Same is the case with kidney and bladder diseases and transplants. We do heart and lung transplants along with bypass surgery, valve replacement, angioplasty etc. We had recently done one small intestines transplant in our Chennai hospital and that’s something we will start doing across our existing and new hospitals now. Neuroscience is another area that we specialise in and have done a lot of work on brain and spine. We have expertise in stem cell transplantation which is a huge speciality area coming up and we are a major player doing a lot of work in Bangalore and Hyderabad with plans to start soon in Chennai.

Is bone and joint replacement also part of your services offerings? 

Yes it is. In fact, we are now planning to start bone banking in Chennai. Once that happens, the patient will not have to undergo the whole joint replacement if the cartilage is gone as only the cartilage will get replaced. Tissue banking is going to be the future. It’s like a spare part to the body that is why we are creating a bone, cartilage bio, tissue, skin, blood and blood products bank. This apart, stem cell therapy is coming in a big way in the bone and joint replacement area and we will be starting that as well. Out next focus area is Cancer wherein we have started the most advanced centre in Bangalore. We are in the process of starting it in Chennai in the next couple of months and Mumbai will follow soon. In cancer, we do bone marrow transplantation and other things. 

Will it be correct to say that a niche play is what you are really banking on? 

A niche but a larger niche is what we are positioned in the market. We are a very big player in the niche area and that’s the only reason why we are not going beyond the tier I cities in India. We get lot of doctors relocated from other countries like UK, USA, Australia etc. They prefer to come to the metros as compared to small towns and cities. We are already present in three key metros of Bangalore, Hyderabad and Chennai in South India. Adding the fourth Indian metro to our network, we will soon open in Mumbai. Thereafter, New Delhi and Kolkata will happen in the next 3-5 years from now. We will be in all the six metros where we have easy access to human resources. High quality and well-trained human resources is very important for any healthcare services provider like us because only then can we deliver the best. 

What is the mix of domestic and international patients at your facilities in the country? 

The technical expertise and cutting edge work that we do is something which is not only in huge demand in India but also with a host of international countries where advanced procedures and quality healthcare services is still a distant dream. There are many countries like the Middle-East, Africa , Sri Lanka, Pakistan, Bangladesh, Malaysia and so on that lack the quality of medical services like what is offered in India that too at a fraction of the cost they would have to pay in any of the developed economies. Approximately 25% of patients visiting our healthcare facilities are foreign nationals and we see the number growing in the coming years. 

What are the most common transplants and how much do they generally cost? 

Today the number of liver transplants is high mainly because liver disease is becoming very common. Kidney is the next organ that sees large volumes followed by heart and lung. There are just 5-6 centres in the country doing such surgeries of which 3 are from the Global Hospitals’ chain as a result majority of the transplants are done by our centres in Hyderabad, Bangalore and Chennai and Mumbai will get added to this network once it gets operational. A liver transplant would cost around Rs 20 lakh, while it will be 8-10 lakh for heart and lung transplant. The cost involved in a kidney transplant is Rs 4-5 lakh. 

By when do you intend to make the Mumbai hospital completely operational? 

It will be a stage-wise launch. We will start with the out-patients-services followed by day care surgeries post which the hospital will get fully operational. All this will be done in the next 6-8 weeks. The Mumbai centre will have 450-beds taking the total number of beds in the Global Hospitals chain to 2,100.

The doctors, are they on consulting basis or full-time? 

We have partners. In the Mumbai facility, we have 7-8 top-notch doctors who are equity stakeholders-cum-partners and will be working full-time in the hospital. This apart, there will be some doctors on part-time consulting basis. Our model is such that a large number of full-timers provide continuity of care and some exclusive doctors associate with us on a case to case basis. The ratio between full-time and part-time doctors is 70:30 and that is how we drive the organisation. The advantage of full-timers is that they are here for most of the day and night. The patient gets full care and attention. Besides, transplants are such complex procedures we will require full-time doctors to do justice to the patient’s treatment. 

Are your other hospitals based on a similar (equity stake) arrangement with doctors? 

No. Mumbai is the first hospital we have experimented with this model and I am quite happy to have excellent partners. We will be exploring the same model for our Delhi and Kolkata centres when they happen in the coming years. I think this will be a model that many other hospital groups will replicate because the partnership approach gives doctors a sense of ownership. Besides, in the coming years, top-notch doctors would like to have a say in the hospitals they associate with and the partnership model works really well. 

The Mumbai hospital must have called for significant investments. What was the overall cost like? 

Putting up a hospital is capital intensive in general and the Mumbai hospital is no different. Fortunately, land for this hospital was given to us by a family trust (M/s Verma Medicine Research Trust) at a very low cost. So our land cost is very negligible allowing us to build a very high quality state-of-the-art hospital with an overall investment of Rs 350 crore. Given the fact that doctors are also stakeholders in the Mumbai hospital, the project has a debt equity ratio of 65:35.

So if you take off the land cost, Rs 70-80 lakh would be the per bed cost. I try to pursue the asset light model because the brick and mortar approach puts a lot of stress on the hospital and the doctors (management) thereby making it difficult to pass on the benefits to the patients. My view in the long-term is that hospitals should be developed through either asset light (management contract) or public private partnership (PPP) wherein land is leased to the hospital chain. 

In terms of the audience you will be catering to, will it be largely those in the upper middle-class and above? 

We will be available for all the three sections of the society as routine healthcare services will also be offered in the hospital. Our positioning in the market will be among the best in the super-specialty segment however approximately 10% of our beds will be allocated for the weaker section of the society and this is a standard practice with all our hospitals. All services to these patients will be offered at a subsidised cost though medicines and materials will have to be bought by them. In fact, this is part of our arrangement with the Verma Medicine and Research Trust. 

What is the staff strength like in your hospital chain? 

Healthcare industry offers great employment opportunities right from housekeeping boys, nurses and doctors. In fact, every bed created generates employment opportunities for 7 people. While we currently have over 5,000 employees in the hospital chain, we will very easily cross 10,000 employees in the coming 2-3 years.

Jyothy aims to treble laundry biz in two years, targets 500 garment care stores by 2015

This story first appeared in DNA Money edition on Wednesday August 1, 2012.

Jyothy Fabricare Services Ltd, India’s biggest laundry chain operator that runs 132 garment-care outlets, has set a goal of reaching Rs 300 crore in turnover by 2015 from the Rs 100 crore expected this fiscal. The subsidiary of FMCG firm Jyothy Laboratories Ltd said it currently services over 150,000 households and is looking to increase it to 1 million households by 2015.

Ullas Kamath, joint managing director, Jyothy Labs, said the turnover target will be achieved on the back of an aggressive retail expansion plan and high volume institutional business.

“We will have at least 200 outlets on our own. New stores beyond that will be franchisees. The target is to have 500 stores by 2015 under Fabric Spa (for premium catchments) and Wardrobe (for sub-premium -- SEC B and C) brands,” he said.

The company will start appointing franchisees from the next fiscal from Mumbai and Pune, which it believes hold good potential.

Laundry business in India is predominantly an unorganised sector, providing huge opportunity to organised players. According to an Insead and KPMG report, the laundry services market in India is expected to grow manifold from current size of over Rs 5,200 crore.

“We will incur a capital expenditure of around Rs 40 crore this fiscal and are targeting a turnover Rs 100 crore. Over the next two years, we will take the turnover to Rs 300 crore by 2015. It is a doable figure because the market is very big and there is enough space for players to build their business,” said Kamath, adding the business has been planned based on the private equity investment received in 2010 and any future requirements will be met through internal funds.

Jyothy Labs holds 75% stake in the Jyothy Fabricare with the balance 25% being acquired by IL&FS Private Equity for Rs 100 crore in 2010.

The laundry firm, which was started in 2009, is looking to target the entire garment care market from retail, premium, sub-premium, institutional and Railways.

Despite significant presence in the country, the laundry firm has chosen not appoint franchisees as yet. Kamath said it can be done after credibility is established and the brand is in the market for 3-4 years. “That’s when we will get a clear picture of how much money can be made. Thereafter, franchising mode will be adopted because we will be then in a position to demonstrate the business opportunity to potential franchisees,” he said.

The company is also expecting a good inflow of institutional business from various markets in the country. It caters to the institutional market selectively, focusing on good pay masters such as five-star hotels and airlines.

“A decent volume of business is coming from the 27-odd trains out of Bangalore that are being serviced by us. Another build-own-operate-transfer contract has been received from Railways in Ahmedabad for about 15 tonne capacity for 10 years. We have bagged a similar contract from Delhi International Airport Ltd for 15 years,” said Kamath.

As malls near completion, PVR lines up a big expansion

This story first appeared in DNA Money edition on Saturday August 4, 2012.

Film exhibitor PVR has earmarked Rs160 crore this fiscal to increase number of screens and open new entertainment centres this year.

Sanjeev Bijli, joint managing director, PVR Ltd, said, “Around Rs120 crore will be invested for adding 82 screens while another Rs40 crore will go in launching four PVR bluO centres. Funding will be done through a mix of internal accruals and debt as well as money recently raised from private equity firm L Capital Eco,” said Bijli. The company had added 50 screens last year.

Earlier on Wednesday, L Capital Eco signed a deal to invest Rs108 crore in PVR’s cinema exhibition and in-mall entertainment businesses. Under the agreement, L Capital will take a 10% fully diluted stake in PVR for Rs57.7 crore in PVR Ltd, launch a joint venture with PVR bluO Entertainment Ltd and invest Rs50.1 crore in various in-mall entertainment, gaming, food and leisure formats.

The PVR management said that with mall developments finally getting completed and delivered during this fiscal the targeted new screen additions will be easily met.

The company has already opened 13 screens so far and the balance 70 screens will open in the next 6-7 months. The new facilities will open in metros and larger cities like Pune (2), Bangalore (3), one each in Kochi, Chandigarh, Nagpur among others. The company also plans to add 70 screens each in fiscals 2014 and 2015, doubling the overall screen count in three years.

Bijli said while inflation in the last few years has led to 10% cost escalations, the company has done certain value engineering to ensure the incremental costs do not impact operating margins. “Our costs per screen currently is Rs1.2 to 1.5 crore for a standard facility, while a top-end screen would cost Rs1.8 to 2 crore,” he said.

With two centres and 50 bowling lanes already operational under the PVR bluO brand, Bijili said new centres would come up in cities like Bangalore, Pune, Ludhiana and Chandigarh in the current fiscal. “Being on a larger scale with over 24 lanes, these are not plain bowling centres. Being reasonably priced at Rs150 per game, the approach works well for the business as patrons do not have to queue up for their turn and the churn is much quicker,”

The bluO centres are typically spread across 30,000 square feet on an average including the F&B area. The per-lane cost (for bowling centres) ranges Rs50 – 80 lakh depending on the location and number of lanes. “Smaller the centre, higher the cost,” said Bijli.

To diversify its entertainment offerings, the company is evaluating a host of out-of-the-home entertainment options, including in the food and beverages area.

These in-mall entertainment concepts are expected to incorporate some international formats.

“These are currently in the evaluation stage and we are expecting to introduce them before the end of this fiscal,” said Bijli.

FDA plans huge fees, yet drug cos happy

My colleague KV Ramana co-authored this story appearing in DNA Money edition on Monday July 30, 2012.

The US Food & Drug Administration is set to charge up to $100,000, or over Rs50 lakh, for each abbreviated new drug application (Anda) and $35,000, or over Rs17 lakh, for drug master files (licence to make bulk drugs) from zero now.

It’s a good thing, say Indian pharmaceutical companies.

That’s because the money would be used by the FDA to reduce the time taken to approve drugs from the current 27-30 months to just 7-8.

The current timeline costs a lot to drugmakers, say analysts, because it can delay launches and manufacturing plans.

“Basically, the FDA wants to collect $299 million through Anda approvals, facility visits, inspections etc, as that is the sum it spends annually to run the department in the US. And since economic conditions are difficult in the US, it wants to collect the money from the generic manufacturers,” said Manoj Garg, analyst with Edelweiss Securities.

On an average, the FDA approves 1,500 to 2,000 applications every year.

About three quarters of the target amount will be collected from plant visits, inspections etc and the rest by way of approvals.

“So about 25% of $299 million i.e, $75 million, divided by the annual Anda applications, gives a range of $25,000 to $45,000 per application approval charges (from the generic manufacturer) depending on the complexity of the molecule,” Garg calculates.

A spokesperson for Dr Reddy’s said, “As long as it speeds up the process, the fees is not a major issue”.

“The FDA is keen on ramping up its infrastructure by deploying the funds raised through the user fees. If that happens, most of us would be willing to pay the fees in order to take the products to the market earlier. There is an opportunity cost and we don’t mind paying,” a senior official another generic drug major said.

However, analysts are not very confident about the timelines getting reduced immediately. According to them, it would take more time for the systems to set in and the results would be seen only after that.

“While FDA wants to improve on the time taken for approving an ANDA, it will not be able to do it within a year as recruiting the staff, training them enhancing the infrastructure etc will take time. As a result, it is expected that timelines will come down over a period of 4-5 years. The target, it is understood, is to bring down the timelines to 10-12 months from the current 27-30 months,” Garg said.

Dr Reddy’s has filed about 4 Andas in the first quarter of the current financial year and about 73 are pending with the regulator for approval.

“We see this as a positive development as the move is intended to speed up the process of approvals. The FDA has a significant backlog of pending approvals. Also, we feel the fees will act as a deterrent forcing a lot companies to be selective about their filings. This again will hasten the process as lesser filings will also imply quicker approvals,” Glenn Saldanha, chairman and MD of Glenmark, said.

According to him, Glenmark’s US business strategy is based on Anda filings in niche segments like dermatology, hormones, controlled substances and modified release categories.

“We intend to initiate 15-20 products filings each year. We have 38 Andas pending approval with the FDA. Hence, we view any move to speed up the approval process as a positive one. Glenmark has received close to 80 approvals till date. About 38 are pending approval with the FDA,” he said.

Bajaj Ventures' sell-off by September ‘12

Consumer electronics major Bajaj Electricals along with another Bajaj group company Baroda Industries are in the process of divesting their stakes in Bajaj Ventures Ltd. Both Bajaj Electricals and Baroda Industries hold 50% each in Bajaj Ventures. 

According to industry sources, the existing owners are currently in a fairly advanced stage of negotiations with the potential buyer and are expecting to conclude the transaction in the coming months.

Confirming the development, Shekhar Bajaj, chairman and managing director, Bajaj Electricals Ltd, said, “The deal will see both the entities divest their stakes in favour of the buyer. Discussions are currently on and a sell-off is likely by the end of second quarter this fiscal.”

While the value of investment on Bajaj Electricals’ books, according to industry sources, is around Rs 15 crore the company management is looking at a significantly higher multiple in terms of realisation from the stake sale. Shekhar Bajaj however did not share any information about the valuation expectations from this sale.

Bajaj Ventures was originally christened Black & Decker Bajaj Pvt Ltd, (Black & Decker Bajaj), which was a 50:50 joint venture (JV) with Black & Decker Corporation, United States. The company was instituted in 1993-94 to manufacture and market power tools, household appliances, and related accessories.

After seven years of operations i.e. in fiscal 1999-2000, Black & Decker chose to exit the JV and sold its 50% stake to one of Bajaj group companies (Baroda industries Ltd) post which the company was rechristened Bajaj Ventures Ltd.

While the Black & Decker brand association with Bajaj Electricals continued despite the JV being called off, the former is now looking to enter the market on its own. And since Bajaj Electricals does not consider power tools as its core business, the company management has decided to generate cash by disposing off the Bajaj Ventures business.

Lupin eyes drug brands in US, Japan

This story first appeared in DNA Money edition on  Friday, July 27, 2012.

Lupin Ltd, India’s third-largest pharma company, is looking to acquire drug brands overseas as it seeks to reduce reliance on less profitable generic medicines.

“There is an active ongoing effort and we are looking at multiple assets. We are hopeful of closing one or two opportunities within the current fiscal,” said Vinita Gupta, director, Lupin. The areas being looked at include paediatric, dermatology, ophthalmology and respiratory.

While Gupta did not specify the geographies eyed for the acquisitions, analysts said the buys will happen mainly in the US, followed by Japan and Europe.

Lupin is seeking to maintain its fastest pace of quarterly sales growth in at least three years by adding to its product portfolio in the world’s biggest drug market. The company and rivals including Ranbaxy Laboratories are shifting strategy to cut their dependence on selling generic versions of medicines as the number of formulations losing patent protection plummet from their peak in 2012.

Lupin earned more than five times as much selling branded medicines such as Antara, a treatment for reducing cholesterol, compared with average sales of all its copycat formulations, according to Fortune Equity Brokers.

In an earlier interaction with DNA Money, Ramesh Swaminathan, president – finance & planning and CFO, Lupin had said the company will invest around $100-120 million (Rs550 crore) in capital expenditure this fiscal. To be funded through internal accruals, the money would be spent across various therapeutic areas and expansion of existing units.

The funding for the international acquisitions will be over and above the capex outlay by the management for this fiscal, said an analyst with a domestic broking firm.

A company spokesperson said the June quarter results beat street estimates by 7-10% in turnover and net profit and 15% on earnings before interest, tax, depreciation and amortisation.

Lupin and larger rivals including Ranbaxy and Dr Reddy’s are trying to boost profit by offering products that are similar though not identical to those protected by patents, claiming they are not copycat versions.

The US FDA classifies such formulations as new drugs, and if approved, they can be sold exclusively for as long as three years in the US.

“If the product clicks, then you make a lot of money and your margins will be also higher,” Bino Pathiparampil, a pharma analyst at IIFL, said. “The development costs will be far higher than an ordinary generic though.”

Lupin has a network of 170 sales representatives in the US to sell its branded portfolio, its president Nilesh Gupta said, adding the company’s future acquisitions are likely to be in an area that doesn’t require a large number of sales personnel.

Lupin is focusing on brands that “don’t need 500 representatives to cover a good number of doctors,” he said. With Bloomberg

ITC net rises 20%, beats Street

This story first appeared in DNA Money edition on  Friday, July 27, 2012.

ITC, the diversified major with interests in consumer goods, hotels, cigarettes and paper, beat street estimates for the first quarter by reporting 20.2% on-year growth in net profit at Rs 1,602 crore (up from Rs 1,330 crore).

Earlier this week, an analyst poll by Bloomberg had indicated that ITC’s profit would grow 19% on-year to Rs 1,580 crore while sales were seen rising 16%.

Key contributors to business included growth in fast moving consumer goods (FMCG) business, price hikes in cigarettes and lower losses in ‘other FMCG’ streams.

The FMCG segment registered robust revenue growth of 23% and improved profitability, ITC said in a statement. “Agri business profits increased, largely driven by improved realisations and enriched portfolio. The paperboards, paper and packaging business witnessed robust performance driven by product mix enrichment. However, hotels business continues to be impacted by weak global and domestic economic environment.”

Rikesh Parikh, VP-markets strategy and equities, Motilal Oswal Securities, said that ITC’s numbers are broadly in line. “Key positives were the lower on-year loss in the other FMCG business and margin improvement in the FMCG business even after the high impact of duty. We expect the company to sustain its margins in the cigarettes business. We also expect the FMCG business to start contributing to the bottomline,” he said.

The company’s gross revenue (or income from operations) at Rs 9,457 crore grew by 15.3% on-year, driven primarily by branded packaged foods, educational material, stationery and the cigarettes business.

Its profit from operations grew by 21.3% on-year to Rs 2,174 crore; profit before tax (PBT) at Rs 2,337 crore was up 20.6% on-year; and earnings per share or EPS for the quarter stood at Rs2.05.

V Srinivasan, research analyst at Angel Broking, said that ITC posted healthy growth in overall net sales. But growth in the cigarettes division primarily came from price hikes.

ITC’s on-year revenues from the agri (Rs 1,691 crore) and hotel (Rs 232 crore) businesses stood flat, in line with the market expectations. Operating loss of the other FMCG business at Rs39 crore, although down on-year from a loss of Rs 76 crore, rose on a sequential basis from a loss of Rs 17 crore in the last quarter of last fiscal.

“This was a disappointment. We continue to remain neutral on the stock, as we believe it is fairly priced at current levels,” said Srinivasan.

Net sales in other FMCG grew 33% on-year to Rs 1,473 crore and losses came down from 7% to 3% of sales.

Cigarette topline grew 15% to Rs 3,304 crore with margin improving 2% on-year. After an excise duty hike of 20% in this year’s Budget, ITC hiked prices by an average 12% in April.

This month the Uttar Pradesh government hiked value-added tax (VAT) on cigarettes to 50% from 17.5%. Analysts expect the company to increase prices 36-40% in UP and 1.5-2% elsewhere to mitigate the impact of the VAT hike.

Lupin plans Rs 550 crore capex in FY'13

This story first appeared in DNA Money edition on  Wednesday, July 25, 2012.

Lupin Ltd, the third largest Indian pharma company by sales, is upping the ante on expansion. The  company has lined up a significant capital expenditure in the current fiscal across various therapeutic areas and on expansion of existing units, a senior company official said.

Ramesh Swaminathan, president – finance & planning and CFO, told DNA Money, “We will invest around $100-120 million (Rs550 crore) in capex this fiscal.” The company will fund the expansion with internal funds.

It has also chalked out aggressive product launches with a robust pipeline across global markets, particularly the US, Europe and Japan.

“We’ll have more than 20-25 products in America alone. In Japan we are looking at close to 20 products over three years and 30-40 products in India on an annual basis,” said Swaminathan on the sidelines of the company’s annual general meeting on Tuesday.

Lupin’s US sales jumped 40% in dollar terms in the April to June 2012 quarter.

In rupee terms, the company’s net profit rose 33% to Rs280.4 crore year on year on higher double-digit sales growth across the US, Japan and India. Net sales rose 44% to Rs2,219.2 crore.

Kamal K Sharma, managing director, Lupin, said, “Strong operating performance, aided by product launches and exceptional growth across US, India, Japan and South Africa, have helped us deliver yet another quarter of sustained growth.”

Highlights of the quarter included a decline in material and personnel costs 3% and 0.6%, respectively though manufacturing and other expenses increased 2.2% year on year (yoy).

Swaminathan said manufacturing and other expenses increased because of higher research & development spend of close to 1%, in addition to lumpiness in sales and promotional expenses.

The company’s US and Europe formulation sales contributed 38% to its consolidated revenues for the June quarter as they grew 60% to Rs841.3 crore yoy.

Its interest and finance expenses rose 74.4% to Rs10.1 crore in the reporting quarter, which Swaminathan said was largely because the company had made an acquisition in Japan. In November, Lupin, through its subsidiary Kyowa Pharmaceutical, had bought Japanese firm I’rom Holdings Co.

Taro shareholders nix Sun offer to buy 33%

This story first appeared in DNA Money edition on  Friday, July 20, 2012.

Minority shareholders of the NYSE-listed Israeli firm Taro Pharmaceuticals have turned down majority stakeholder Sun Pharmaceutical’s $367 million offer to acquire the remaining one-third stake they do not own yet.

Rejecting the proposal, they said in a statement on Thursday that the Indian drugmaker’s offer of $24.50 per share was inadequate and not in their best interests.

On October 19 last year, Sun made its offer which was at a near 26% premium to Taro’s share price. Since then, however, Taro’s share price has risen, to close 0.14% up at $35.69 on Wednesday. At the time of writing, Taro was trading at $37.41 on Thursday.

In 2007, Sun had offered to buy Taro Pharma for $450 million, but it could obtain management control only in September 2010 after a bitter legal battle with Taro’s former promoters. Sun now holds 66.32% of Taro, bought in tranches, the first being the 36% it acquired at $7.75 in May 2007.

In an attempt to take the company private, Sun Pharma had made a non-binding offer to acquire the balance stake last year, but it was not successful.

Sun Pharma officials were not available for comment.

Ever since Sun bought the controlling stake in Taro, the latter’s two minority shareholders -- Raging Capital and Grand Slam Asset management -- have been pressuring Sun for a higher price to part with their stakes. They said there was a significant improvement in Taro’s performance over the years and that Sun was highly undervaluing its shares. Raging valued Taro’s shares at $106.91, while Grand Slam put its figure at $48. Another minority shareholder – Guardian Point Capital – had asked Sun to revise its buyout bid as well.

Sun has been maintaining that it will stick to its offer price, but, in the wake of Thursday’s developments, it may well have to reconsider. — With Agencies

Philadelphia courts Kuoni to lure Indian leisure travellers

An edited version of this story first appeared in DNA Money edition on Tuesday July 17, 2012.

Kanika Choudhary

Rajiv Duggal

From Hindi speaking guides at tourist spots to serving masala chai, the US city of Philadelphia is going all out to woo the over 12 million Indian outbound leisure travellers.

Having worked aggressively towards promoting education and related activities for over two years now, the honorary ambassador of Philadelphia to India, Kanika Choudhary is set to replicate the magic in the area of travel and tourism. Taking the first step in this direction, a partnership agreement has been inked with Kuoni India to design, promote and market Philadelphia to Indian tourists taking leisure travel to the United States.

A native of India, Choudhary has lived in Philadelphia for 12 years and is very confident about the huge opportunity both the nations could explore in the coming years. Commenting on the recent association with Kuoni India, she said that partnership will focus on promoting leisure tourism giving the Indian outbound leisure travellers a personalised touch.

“The approach will be extended in every aspect that Kuoni India will be working with us on. This apart, we will have the city government make a special niche for the Indian tourists visiting the city of Philadelphia,” she said.

Kuoni India on its part will now introduce Philadelphia as part of its US tour package as the city was never being launched as a standalone product earlier. In fact, Philadelphia was always a pass-through and never a one-night stay destination in Kuoni’s US itinerary earlier and all that is about to change now.

According to Rajiv Duggal, managing director, Kuoni India, while New York is iconic it is also very expensive as compared to Philadelphia, which is 25% cheaper and still offers the tourist a culturally rich American experience. “This is very unique to the city. The government is very receptive to suggestions and quick in adapting as per the needs and requirements of the tourists visiting the destination. We are in the process of putting together a strategy on bringing Philadelphia and India come closer.

“Brainstorming is also being done to see quality tourism whether groups, FIT, MICE etc moving into Philadelphia and that was the main purpose behind my recent visit there. It is a new, interesting destination for us and we will be putting a lot of effort in promoting the place in the coming months and years,” said Duggal.  

Kick-starting the awareness exercise a couple of years ago promoting Philadelphia’s educational institutions and universities with the aspirants across India, Choudhary is working aggressively towards putting Philadelphia on the itinerary of Indian leisure travellers to the US. While the arrivals into Philadelphia from China is huge followed by Asia and Europe, outbound traffic from India has started picking up gradually. And now with Kuoni India by their side, Choudhary is confident that the numbers will shore up significantly in the coming years.

“Philadelphia might be most famously known as the birthplace of American democracy, but you'll find it's an ideal destination for discovery as you explore its colourful neighbourhoods, learn more about its rich history and delve into its spectacular sites and attractions. We are putting together a host of offerings for the Indian market and are confident of welcoming 3,000 to 5,000 tourists this year,” she said.

Emphasising on the fact that it is not a one way traffic, Choudhary added, “We are not just pushing them to come to Philadelphia and we are certainly not here to ask or to make deals. Making friends, allies / contacts with the people of India and assisting them build deep relationships with Philadelphia is what we are focusing on. We want them to have the real American experience.”

Citing an example of what a real American experience was all about, Choudhary said, Philadelphia is where the United States (US) was born (on July 4, 1776), with the signing of the Declaration of Independence – a document separating the 13 colonies from England. This apart, it is also known as the city of birth, with the oldest ice cream maker, the oldest departmental store, the largest shopping mall and so on.

With a fairly decent size of Indian population of around 10,000 in the state of Pennsylvania, the destination currently offers huge opportunities in sectors like education, medicine, research and development, life sciences, biotech etc. One of the very unique aspects about Philadelphia is that it is situated between New York and Washington, DC, and can be reached easily in an hour and a half via flight.

Among other responsibilities on Choudhary is to enhance the trade and investment relationships with India. While Pennsylvania as a state has already initiated efforts through an office in Bangalore, the city of Philadelphia will put in place a process to building trade and investments related relationships with Indian companies. “I have met several top officials from the chamber of commerce and as a matter of fact we are planning to get a delegation down to Gujarat this year. We will be channelising more such activities with various Indian states in the near future,” said Choudhary.