The pharmaceutical company will continue as Wockhardt Ltd while the life sciences business would be carved out under Wockhardt Life Sciences Ltd (WLSL). Each Wockhardt shareholders, including the GDR holders, would get shares of the new life sciences company in the ratio of 1:1 for no extra cost. The board of directors of Wockhardt had approved the demerger scheme, based on the recommendations by management consultants McKinsey & Co, at a meeting on July 23, 1999.

The shares of the new company would be listed on all the stock exchanges, including the Luxembourg stock exchange, where Wockhardt is presently listed.

On the basis of current performance of these businesses, the sales split between Wockhardt Ltd and WLSL will be in the ratio of 73 per cent to27 per cent and profit from operations in the ratio of 80 per cent to 20 per cent respectively. The net worth will get divided in the ratio of 32 per cent for Wockhardt Ltd and 68 per cent for WLSL.

As a result, Wockhardt said, it is expected that the newly formed Wockhardt will have a return on net worth of 23 per cent. The unified Wockhardt's net profit for the year ended June 30, 1999 amounted to Rs 72.1 crore.

After the demerger, Wockhardt will be involved in marketing and manufacturing with its 250 scientist multi-disciplinary R&D organisation. WLSL will focus on agriscience, IV fluids and hospitals businesses.

Wockhardt said Wockhardt Europe Ltd, Wockhardt Americas Inc, Wallis Laboratories, UK and the bio-tech joint venture Wockhardt Rhein Biopharm Ltd would be part of the pharmaceutical business.

The company said agri-science, IV fluids and hospitals businesses have reached a critical mass with a successful business model and each of the three businesses is a profitable high growthbusiness.

Explaining the rationale for the segregation, Wockhardt chairman Habil Khorakiwala said "given the rapidly changing environment in Indian pharmaceutical industry, a knowledge and technology based company like the new Wockhardt will be able to concentrate in creating large brands and globalising products on one hand while carrying out R&D on the other".

Wockhardt said the demerger scheme would be referred to the Mumbai High Court for approval and sanction under the relevant provisions of the Companies Act, 1956.