Mankind Pharma’s Board Nods to OTC Business Slump Sale

On April 2, 2024, Mankind Pharma Limited informed the stock exchanges that the company’s board had approved the sale of its Over The Counter (OTC) business to a yet-to-be-incorporated wholly-owned subsidiary.

Details of the Sale and Subsidiary

On Tuesday, Mankind Pharma held a board meeting and informed the stock exchanges that the board of the company gave a nod to the slump sale of the Over the Counter business of the company to a Wholly Owned Subsidiary Company, which is proposed to be incorporated with the name of Mankind Consumer Products Private Limited or any other name as approved by Ministry of Corporate Affairs.

The company stated, “The transaction will be effective on or before October 1, 2024, or such other date as may be mutually agreed between the parties, subject to customary closing conditions. The Company will continue to have business operations with the proposed incorporated entity on an arm’s length basis.”

They further added, “The Board of Directors of the Company have approved the slump sale of the OTC Business of the Company today, i.e. April 2, 2024, including the authority to directors/ officers of the Company to enter into the Business Transfer Agreement and other related documents to give effect to the transaction. The Business Transfer Agreement (BTA) will be executed in due course.”

Mankind Pharma stated that the consideration would not be less than the fair market value of the OTC Business determined as per Rule 11UAE of the Income Tax Rules, 1962, which will be discharged in accordance with the terms of BTA. Also, the proposed transaction does not form part of any Scheme of Arrangement.

The company mentioned that the proposed wholly-owned subsidiary will be incorporated in India and shall carry out the business of trading and manufacturing various types of consumer healthcare products, predominantly over-the-counter drugs and products. The new subsidiary will have an initial paid-up capital of ₹5 crore with a further investment of up to ₹250 crore in one or more tranches, as may be decided by the board.

Regarding the rationale for the slump sale, the pharmaceutical company Mankind Pharma said that they have been evaluating its position and business strategy and exploring various options to grow the OTC Business in a more focused manner. The slump sale will enable the company to remain agile in the marketplace, build wider consumer reach and create a stronger brand recall for the OTC Business. They also believe that rationalising its structure will provide opportunities to enhance stakeholders’ value by creating sustainable and quality OTC businesses.

Mankind Pharma stated that the revenue of OTC Business for FY 2022-2023 was ₹704 crore, which was 8.7% of ₹8,127 crore being revenue of the company. The net worth of the OTC Business of the company as of March 31, 2023, was ₹155 crore, which is 2% of the net worth of the company, which was ₹7,783.91 crore.

On April 2, 2024, the Mankind Pharma share price opened at ₹2,320.00, touching the day’s high at ₹2,376.50, as of 2:00 PM on the NSE.

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