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Vijay C Roy | New Delhi/ Chandigarh April 26, 2012Last Updated
at 00:58 IST
Gloomy times for Surya Pharmaceutical as firm
closes plants in Jammu, Haryana
Surya Pharmaceutical Ltd, the flagship company of Rs 1,700-crore
Surya Corp, has closed two of its units
namely Jammu plant, which was still under trial production and
one at Panchkula (Haryana) unit. As far as
the other manufacturing facilities are concerned, the company is
curtailing and consolidating the operations
for now as a part of restructuring, Surya said in an e-mail. The
company has also submitted its case for debt
restructuring.
The company has six units spread across Punjab, Haryana,
Himachal Pradesh and Jammu & Kashmir
according to the annual report 2010-11 and manufacture API, fine
intermediates, formulations, herbalproducts, and menthol/mint
derivatives and having a client base spread across 90 countries
across the globe.
Surya cited that two plants have been closed due to the paucity
of working capital. On being asked about the
reason behind closure of units and where the strategy went
wrong, the company said that recently it got into
cash flow problem because of the delay in commissioning and cost
over-run of the Jammu plant. It was also
constrained to raise the required capital from the financial
market due to high interest rates, tight monetary
conditions and adverse global economy and consequently could not
get the desired support from bankers.
There have also been some foreign exchange losses and delay in
receipt of export payments, which further
tightened the cash flow situation.
However, insiders mentioned that the company executed massive
expansion which includes acquisition and
diversification during the last two-three years which led to
cash flow problem. They also mentioned that
qualified and very good talent are needed to manage the
operations since the company has diversified
interests, as the attrition level was very high at senior
positions, things couldnt be managed properly.
In December 2010, the company had acquired ActivOn, a leading
OTC analgesic drug brand in the USA,
with global marketing rights. The brand comes with the
acquisition of Ameshire Investment Corp, USA
through its 100 per cent subsidiary based out of Singapore.
The company had funded the investment of $22 million through a
mix of internal accrual and debt financing
from EXIM Bank. Besides that it has also diversified in pharmacy
retail through its subsidiary, SuryaHealthcare Ltd under Viva brand
in Delhi, NCR, Punjab, Haryana, Maharstra, Andhra Pradesh,
Uttar
Pradesh, Chandigarh etc.
The company had also bought Hyderabad-based Medimart Pharmacy ,
which runs 42 drug retail outlets in
Andhra Pradesh, for Rs 10.50 crore in 2010-11.
Despite cash flow problem, the company is hopeful that it can be
revived post restructuring and it has
submitted its case for Corporate Debt Restructuring (CDR).
According to an e-mail sent to Business
Standard, it states that the company was referred by the State
Bank of India as the leading bank of the
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consortium of its bankers for debt restructuring and the case
has already been admitted by CDR cell with the
support of majority of lenders.
In view of the confidence reposed by the bankers and the company
having very good manufacturing assets
compliant to USFDA and other international standards, it is
confident of reviving back post restructuring, it
stated further.
On being asked about the reason behind top management people who
left the organisation the company stated
that some team members have left the Company for greener
pastures which is quite common in the corporate
sector.
The Rs 1700 crore group, Surya Corp is an integrated group of
companies, with diversified interests in
pharmaceuticals, healthcare, education, pharmacy retail and
beverages.
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