Trouble at Wockhardt Limited
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : FINC084
Case Length : 15 pages
Period : 1959-2008
Pub. Date : 2013
Teaching Note : Not Available
Organization : Wockhardt Limited
Industry : Pharmaceutical
Countries : India
To download Trouble at Wockhardt Limited case study (Case Code:
FINC084) click on the button below, and select the case from the list of available cases:
OR
Price:
For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping &
Handling Charges
» Finance Case
Studies
» Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Area Specific Case Studies
» Industry Wise Case Studies
» Company Wise Case Studies
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Chat with us
Please leave your feedback
|
|
<< Previous
Excerpts
Foreign Currency Convertible Bonds (FCCBS) Issue
|
In September 2004, the company issued 110,000 5-year, zero coupon FCCBs of US$1,000 each which made up a total issue size of US$110 million. These bonds were redeemable on the maturing date at 129.578% of the principal amount i.e., at US$1,295.78 (US$1,000 x 129.578%) per bond or US$142.54 million (US$1,295.78 x 110,000 bonds) in total. Bond holders could convert the bonds at any time on or after November 24, 2004, but prior to the close of business on September 25, 2009. Each bond would be converted into 94.265 fully paid-up equity shares with a par value of Rs. 5 per share at a fixed price of Rs. 486.075 per share.
|
|
The company had the option to redeem these bonds in whole not in part, at any time on or after October 25, 2007, but not less than seven business days prior to the maturity date i.e. October, 25, 2009.
The FCCBs issue was oversubscribed by five times . The company garnered Rs. 4,779.94 million (US$ 110 ) from the issue, majorly taken up by Indian banks and foreign investors. Wockhardt planned to use the money raised to fund the expansion activities of the company. By the end of 2004, Wockhardt’s unsecured loan increased from Rs. 48.15 million in 2003 to Rs. 4,832.23 million in 2004 . The company’s net profit and total income increased 49.65% and 33.48% respectively over the previous year...
Looking Forward
Khorakiwala’s statement came at a time when the company’s profit was shrinking with each passing quarter and the redemption date of the FCCBs was approaching. The company had to pay US$140.59 million to the FCCB holders due in October 2009. In fiscal year 2008, Wockhardt had posted a loss of Rs. 5.81 billion due to Mark to Market and derivative losses and it had over Rs. 42.35 billion of total borrowings at the end of the financial year 2008. Wockhardt had generated Rs. 3.71 billion from operations against ongoing capital expenditure of Rs. 3.36 billion, which left the company with just Rs. 350 million. Therefore, Wockhardt had to look for other sources of funds...
Exhibits
Exhibit I: Various Companies Acquired by Wockhardt
Exhibit II(A): Rising Debt/Equity Ratio
Exhibit II(B):Substantial Increase in Debt and Interest Expenses of Wockhardt
Exhibit III: Dividend History of Wockhardt Limited
Exhibit IV: R&D Expenditure by Wockhardt in Various Years
Exhibit V: Consolidated Financial Highlights of Wockhardt Limited (in Rs. million)
|
|
