Mumbai, Dec 16: Shareholders of Novartis India, on Thursday, approved a resolution to "sell, transfer, lease or otherwise dispose of" the company's crop protection chemicals manufacturing facility at Panoli in Gujarat. Novartis India "is very close" to sealing the proposed sell-off deal. Company managing director Erwin Schillinger told shareholders at the extra-ordinary general meeting (EGM) that the book value of the facility is Rs 6.1 crore and it represents only a fraction of the total value of the company's assets.
"Our intention is to sell it as a whole, but if we don't reach this goal of 100 per cent, we will at least achieve 80 to 90 per cent. I can assure that the deal will be done at above the book value," he said. Schillinger added that though there is no deadline for the proposed sale, the company hopes to seal the deal "in the coming weeks".
Novartis will also have to pay a specific sum (around 10 per cent) to the Gujarat Industrial Development Corporation (GIDC), from which the land on which the facility is situated had been taken on long lease. The Panoli unit, constructed in 1987, manufactures quinalphos (capacity utilisation is in the region of 55 per cent) which accounts for sales of around Rs 30 crore. Indications are that the proposed buyer will continue to manufacture the product for Novartis India even as the unit will be sold as a going concern.
On the proposed end-use of the proceeds from the plant sale, Schillinger said: "It depends on how the final deal is structured. It is not necessary that the entire sales return comes in this business year. But, you know that we have a flexible dividend policy". Besides, Syngenta (the dedicated global agribusiness entity to be created by the merger of Novartis'crop protection and seeds business and Zeneca Agrochemicals) is also in the process of being formed internationally. The proposed sale of the unit forms part of an attempt to "streamline and consolidate" Novartis' manufacturing operations at the Santa Monica site in Goa. The Panoli undertaking, in the opinion of the company's directors, is in excess of the company's present/projected future requirements.
The unit will be valued by "expert valuers" and services of all employees, including executives and workers of the undertaking (believed to be around 80) will be transferred on the same terms and conditions with continuity of service, to the acquirer.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.