CALCUTTA, July 2: The Ohmeda division of BOC India is being transferred to Instrumentarium Corporation of Finland for a maximum consideration of Rs 30.67 crore, based on a due diligence and valuation done by a committee of directors.The decision to sell off the Ohmeda division was part of the BOC Group plc global strategy to exit from healthcare business and concentrate on industrial gases and distribution services.
In fact, the BOC Group had announced its intention on July 23, 1997 to seek a purchaser for its Ohmeda division as it felt that "healthcare activities would have a much better opportunity to develop further if it is a part of a larger integrated healthcare business".
The BOC Group divested its Ohmeda business worldwide effective from April 4, 1998 in favour of a consortium of three companies (Instrumentarium of Finland, Becton Dickinson and Baxter International of the US) for a net consideration of $1,050 million, out of which Instrumentarium's share was about $494 million.
According tothe sale agreement signed early this year, Ohmeda's medical systems division (MSD) and speciality products division (SPD) is going to Instrumentarium, the pharmaceuticals products division to Baxter and the medical devices division to Becton Dickinson.
The agreement also specified that Instrumentarium would acquire the MSD and SPD businesses worldwide which explains why it got Ohmeda's Indian division. Besides, it has received the exclusive worldwide right to use the Ohmeda brand name.
In India, the activities of the healthcare division comprised mainly:
Marketing of imported Ohmeda products in India;
marketing of imported Hewlett Packard anaesthesia and patient monitoring equipment under worldwide/local agreements;
marketing of imported Nellcor Puritan Bennett respirators;
sale and distribution of indigenous Boyle anaesthesia machines;
installation of specialised medical gas supply systems in hospitals; and
servicing of all equipment in the BOC Indiaportfolio.
Earlier this year, the company had appointed J P Morgan to prepare an independent valuation and advise on the terms of sale. Its recommendations have been vetted by a committee of directors appointed for the purpose.Based on the recommendations of this committee, the company has now proposed to transfer Ohmeda as a going concern at a price not less than Rs 30.67 crore. Since this attracts provisions of Section 293(1)(a) of the Companies Act, 1956, the company is now seeking shareholder approval for the transfer of the Ohmeda division later this month to complete the divestment in the current year itself.
The first half of the current year, which ends in September 1998, for BOC India has been dismal with profit margins under pressure, largely due to the slow growth of the steel industry which is its main customer.
The company reported a net profit of Rs 2 crore only on a turnover of Rs 119.30 crore. In the comparable period of 1996-97, it had achieved a net profit of Rs 4.20 crore on salesof Rs 110.30 crore. Analysts expect the sale of the Ohmeda division to help the company shore up its bottomline for 1997-98.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
