Turnaround Story of Wockhardt Limited|Finance|Case Study|Case Studies

Turnaround Story of Wockhardt Limited

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Case Details:

Case Code : FINC086
Case Length : 23 pages
Period : 1959-2012
Pub. Date : 2013
Teaching Note : Not Available
Organization : Wockhardt Limited
Industry : Pharmaceutical
Countries : India

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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.

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Demerger of Business into Two Companies

In January 2000, the company demerged its business into two companies. The old company, renamed as Wockhardt Life Sciences Limited (WLSL), would manage agri-sciences, IV fluids, and hospitals. The knowledge-based pharmaceuticals and bulk drugs business was transferred to the other demerged company – Wockhardt Limited (WL). The existing shareholders and GDR holders of the old company got one share each of WLSL and WL. In September 2000, FHHIL was first renamed as Wockhardt Health Sciences Limited (WHSL). Then in October 2000, it was renamed as Wockhardt Hospitals Limited (WHL) . In 2001, WLSL transferred the hospital business to WHL for Rs. 180 million...

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

Wockhardt Acquisation Spree Through Leverge - Growth Phase

In May 2004, Wockhardt acquired Esparma GmbH (Esparma), a German company, for US$11 million, funded through internal accruals. Esparma had a significant presence in urology, neurology. and diabetology, which was in line with Workhardt’s therapeutic strengths. Wockhardt acquired only Esparma’s brand, businesses, and sales and marketing organization - not its manufacturing facility However, Wockhardt decided to use the manufacturing facility for two years before production shifted to the company’s own facility in the UK and India...

Trouble at Wockhardt - Declining Phase

In January 2008, WHL came up with an Initial Public Offer (IPO) of about 25 million equity shares. It planned to use the proceedings of the IPO for its expansion plans (Rs. 5.69 billion) and for prepayment of short term loans (Rs. 2.85 billion ). However, the IPO failed to garner funds and was called off by the promoters as it got poor investor response even after a reduction in the price band from Rs. 280-310 to Rs. 225-360 and extension of the closing date (of IPO) by two days. On February 9, 2008, Livemint reported that the company was looking for other ways to raise funds including private placement...

Wockhardt Under Corporate Debt Restructuring

On March 31, 2009, in a statement to the Bombay Stock Exchange (BSE), Wockhardt decided to refer itself to the CDR cell through ICICI Bank Limited (ICICI) to resturctured its mounting debts of over Rs. 38 billion . In a letter (mentioned earlier) Habil said, "It (CDR) allows us non-payment towards our loans for some time, thereby giving us a huge flexibility in generating our own liquidity”. Huzaifa Khorakiwala (Huzaifa), Executive Director, Wockhardt, and Habil’s elder son, said, “It’s a natural progression in the lifetime of a dynamic organization to continuously further the interests of all its stakeholders."...

Liquidating Assets

In an attempt to get rid of non-core assets, the company sold its German subsidiary Esparma GmbH to Mova GmbH for around Rs. 1.2 billion and signed an agreement with Vétoquinol SA to sell its animal health business in India for an estimated Rs. 1.7 to1.8 billion. , In August 2009, Wockhardt sold its ten hospitals to Fortis Healthcare Ltd. for Rs. 9.09 billion (Rs. 0.052 million per bed)....

Default on FCCBs Payment Consequences

In October 2009, Wockhardt had defaulted on repayment of US$74 million worth of FCCBs. On October 31, 2009, the company reported Rs. 542 million of net loss in the quarter that ended on September 30, 2009...

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