Delhi-based drug maker Panacea Biotec Ltd is planning to sell its Gurgaon-based hospital which is yet to start operations, the company has said.
Panacea through its subsidiary NewRise Healthcare Pvt Ltd is setting up a hospital in Gurgaon and has invested around Rs 50 crore on the project to date. The project has also been part-funded by way of secured loan of Rs 101 crore from Bank of Baroda. The project could not be completed due to shortage of funds.
The board of the firm has decided to sell its entire or substantial part of stake in NewRise at an enterprise value of not less than Rs 50 crore ($8.1 million). The company holds 87.4 per cent stake in the subsidiary.
VCCircle had first reported that Panacea has put the hospital on the block. It is learnt that the asking price for the property is around Rs 200 crore.
Panacea started setting up this 224-bed hospital in 2008 jointly with Gurgaon-based Umkal Medicals which runs hospitals in Delhi NCR under the brand Umkal Hospitals.
The company’s move to launch this hospital was aimed at entering the healthcare services space. Panacea had plans to start a chain of hospitals and was also looking at opportunities to raise private equity capital for this, according to a previous report by Business Standard.
According to sources, the hospital is completely built and should have started functioning but Panacea has now changed its plans.
According to the company website, the hospital was scheduled to start operations in the last quarter of 2012.
The company has been facing financial headwinds and saw its consolidated net revenue decline 12.5 per cent to Rs 475 crore for the year ended March 31, 2014. Its net loss halved but stood at Rs 116.88 crore in the same period. Its finance cost rose almost 50 per cent to Rs 150 crore last year.
The company started facing challenges in 2011, when World Health Organisation (WHO) delisted three of its diphtheria-pertussis-tetanus based combination vaccines from its list of pre-qualified vaccines. A year later, Panacea withdrew its oral polio vaccine from WHO list of pre-qualified vaccines stating the facility where the vaccine is manufactured needs further corrective actions.
Last year Swiss drugmaker Novartis called off its eight-year-old joint venture with the company to develop and market pediatric vaccines.
Panacea has been looking at ways to divest its assets to raise capital. Earlier, it entered into a partnership with Bestech Group to develop a township project over 100-acre plot at Pataudi Road which it owned.
Panacea wanted to develop a biotech SEZ at this land earlier but later abandoned this plan. The company holds equal stake with Bestech in this realty project.
In July, it announced that it is also planning to raise up to $42 million by way of issue of securities.
Panacea Biotec's scrip closed at Rs 153.25 each, up 0.07 per cent on BSE in a flat Mumbai market on Wednesday.
(Edited by Joby Puthuparampil Johnson)