MUMBAI, June 20: Glaxo-Wellcome is looking at "suitable" acquisitions in India as part of its strategy to widen its product range and increase its marketshare. The British drug multinational's two Indian subsidiaries, Glaxo India and Burroughs Wellcome India, have together put up a warchest of Rs 400 crore to play the takeover game.

Shareholders of Burroughs Wellcome India Ltd (BWIL) today approved enabling resolutions at the annual general meeting in Mumbai to facilitate an investment of upto Rs 100 crore in the shares of any body or bodies corporate. In the case of Glaxo India, the AGM approved a limit of Rs 300 crore.

Both the investment limits are "in addition to the investments in shares of any body or bodies corporate which the board of directors of the company is entitled to make upto the limits prescribed under Section 372 of the Companies Act".

Observed T. Thomas, chairman of Glaxo India and Burroughs Wellcome India, with a degree of understatement: "Fortunately, we have enough financial resources for such acquisitions". Thomas' speech was taken as read at the Glaxo AGM in his absence.

Glaxo and BWIL managing director HR Khusrokhan told shareholders: "If an attractive opportunity comes our way then we must move quickly to strike the deal and the enabling resolution will help us act fast". About the expected merger of the two companies, Khusrokhan said "it was a mere legal formality".

He pointed out both companies were already working together on the operational front. But wage disparities between the two companies had to be settled before the merger, he said.

He assured shareholders that the valuation of shares to determine the swap ratio for the merger would be done by valuers of the highest repute and would take into account the earnings potential of both companies.

Glaxo shareholders also approved an enabling resolution for the buyback of shares and increasing the borrowing powers of the company so that the "total amount borrowed and outstanding at any time shall not exceed Rs 500 crore".

Meanwhile, the combined turnover of Glaxo India and Burroughs Wellcome India Ltd (BWIL) is expected to exceed Rs 1,000 crore in 1997. In the year ended December 1996, the combined turnover was about Rs 892 crore. Khusrokhan also said that no consideration or royalty was being paid to the UK-based parent company but added that "we can't promise there will be no royalties in future also".

Replying to specific queries, he said that Glaxo had discontinued the production of triple antigen vaccines as the prices were not remunerative. Similarly, BWIL's Mulund facility in north-east Mumbai would manufacture only tablets and would be dedicated for exports.

Khusrokhan also said that manufacturing operations at Glaxo's Worli facility in midtown Mumbai was being scaled down and only the tableting facility would continue at the unit. In his speech, Thomas cited the "high cost of labour, transportation and urban restrictions" as the main reasons for the unit becoming uneconomic.

The Glaxo-Wellcome group is set to launch a slew of new drugs for blood pressure, diabetes, etc, the AGM was informed.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.