Maneesh Pharmaceuticals Pvt Ltd, the Rs 800-crore pharmaceutical firm, faces a winding up petition, which ABN AMRO Bank NV (now The Royal Bank of Scotland NV) is planning to file against the company, on account of outstanding loan dues, sources familiar with the development told VCCircle.
The privately-held pharma firm’s proposed plans of raising up to Rs 125 crore by way of private equity funding may also hit a roadblock under the situation.
The genesis of the issue was in April 2008 when Maneesh Pharma had taken a loan facility from ABN Amro at 9.5% to augment its working capital. Later, in August, as ABN Amro offered to convert the same to foreign currency non-resident (FCNR) offering at a better interest rate, Maneesh is learnt to have opted for the same when the bank is understood to have agreed to give a forward cover to hedge against currency fluctuations.
According to sources close to the development, ABN AMRO, however, subsequently refused to extend the forward cover, though it was part of the agreement. When the loan matured after three months, the currency took a tumble and Maneesh had to book a loss of almost Rs 6 crore.
It is learnt that ABN AMRO started charging an interest at 23%. The over-due interest amounted to Rs 12 crore in addition to the Rs 45-crore principal amount. The company had to dispute the liability and ask the bank to negotiate for settlement of the dispute by converting the accumulated interest amounting to Rs 12 crore into working capital demand loan (WCDL) payable in 36 equal instalments. After paying down-payment of Rs 1.5 crore, the bank is learnt to have come up with a revised term sheet asking for additional guarantee by directors and also corporate guarantee by sister concerns for Rs 12 crore, which the company did not agree to and went under dispute.
Speaking to VCCircle, Vinay Sapte, managing director, Maneesh Pharma, said, “The company has all the intention and ability to make payment of their true liability. The bank’s action of non-co-operation is preventing us from raising more capital.” When contacted, an RBS India spokesperson refused to comment.
According to sources, management of Maneesh Pharma plans more meetings with RBS officials to sort out the issue. The company officials are reasoning with the bank that a winding up petition will only lead to a further delay in loan recovery at a time with the pharma company is looking at raising capital. "We will defend the case through the legal recourse available with us," Sapte added.
“Our plan of raising PE is in progress. We have plans to raise Rs 125 crore through the private equity route to meet fund requirement for business expansion, working capital and certain repayments/interest obligations. We have appointed a merchant bank for the PE fund-raising exercise. We do not plan for any business sell-off. On preferential allotment basis, we have raised Rs 25 crore. The process has been started and will take 2-3 months to materialise,” he added.
Maneesh had been in news after acquiring the Smyle range of over-the-counter (OTC) products from Kopran Pharma two years back. It had also plans to float an initial public offer (IPO) to raise about Rs 500 crore.
Maneesh Pharmaceuticals has presence through joint ventures and subsidiaries in more than 70 countries across Africa, South America, Europe, Middle East, and the Asian Continents It has marketing presence in the Indian market through its two marketing arms, Svizera Healthcare and Maneesh Healthcare. Both these divisions together have a strength of over 1,000 medical representatives.