 |
| Morepen's Suri (in happier times):
He is now all set to launch a host of new drugs in the international
market |
They were all once favourites of investors. Their
scrips, without exception, scaled Mount Everest on the stock exchanges
before plunging below sea level. Morepen Laboratories, Himachal
Futuristic Communications (HFCL), Pentamedia Graphics and Silverline
Technologies were all brought down by a combination of bad luck,
bad timing, poor decisions and corporate over-reach. Now, they are
all planning comebacks.
The 9/11 blasts in the us contributed directly
to Pentamedia's and Silverline's misfortunes. Says Ravi Subramanian,
Chairman & CEO of Silverline: "The dotcom bust and the
9/11 terror strikes in the us completely changed the business
environment and got us into a financial mess." Most of its
receivables turned bad, and the massive debt it had taken on to
finance its expansion brought it to its knees, and led to Subramanian
losing his 14-acre mansion in New Jersey. The same scenario also
sank Pentamedia, which bet big on animation films, for which the
United States is the main market.
In Morepen's case, it was the 90 per cent fall
in the price of its bread and butter prime bulk drug Loratidine,
from $8,000 per kg to $1,000 per kg that brought it down. The
company defaulted on its loan repayments; banks froze its working
capital credit line, thus, making it impossible for Morepen to
survive in the cut-throat export market. And HFCL suffered in
the absence of capex in the landline and broadband segments of
the telecom market and the fact that it did not have a presence
in the mobile telecom space.
Incidentally, HFCL, Pentamedia and Silverline were
also tainted by their alleged association with Ketan Parekh. Now,
ironically, it is the same stock market that is throwing these
companies a lifeline. "Investors are funding these companies
(and, thus, enabling them to pay off their debts) only because
the markets are rising," says Sameer Koticha, Executive Director,
ask Raymond James Securities.
Morepen Laboratories
Betting on High-end Drugs
 |
| Silverline's Subramanian: Focussing
on IT and BPO sector |
Morepen Laboratories is planning to place 25 per
cent of its equity with a group of foreign banks and large domestic
investment banks to raise Rs 400 crore. It is also settling most
of its outstanding debt of Rs 750 crore by making a one-time payment
of Rs 130 crore. Says Sushil Suri, CMD, Morepen Laboratories: "Going
forward, we will concentrate only on formulations and high-end products
that enjoy higher margins." The company's target: a turnover
of Rs 450-500 crore by 2008-09. It also has 20 bulk drugs that are
ready for launch in the international market. The biggest one is
Atorvastatin (Lipitor) which enjoys a global market size of Rs 60,000
crore and Monteluakast (market size Rs 30,000 crore). But it's a
highly competitive market and Morepen will have to really extend
itself to succeed.
FACT SHEET
Adjusted share price*: Rs 16.28
All-time high adjusted share price: Rs 241.8 on February 11, 2000
Promoter: Sushil Suri, CMD
Promoter's stake**: 33.33 per cent
Turnover (2005-06): Rs 127.01 crore
Loss (2005-06): Rs 23.1 crore
*As on January 15, 2007 **As on September 30, 2006
Source: CMIE
What went wrong with the company:
The fall in prices by 90 per cent of its prime
bulk drug Loratidine saw the company defaulting on the repayment
of bank loans; lenders froze the company's working capital facilites,
thus, making it practically impossible for it to operate in the
export market. This sudden and sharp crash in prices was due to
the product being shifted from the prescription (Rx) category
in the US to the over the counter (OTC) category which is not
funded by insurance.
How it plans to come back:
Going forward, the company will concentrate more
on formulations and finished dosages that enjoy high margins.
It has raised money from investors that it is using to pay off
most of its debt.
Silverline Technologies
Focussed on the IT Sector
 |
Pentamedia's
Chandrasekaran: Plans to enter the gaming market |
The company has cleaned up its books. A one-time
settlement with banks, wherein it paid off Rs 60 crore in lieu of
outstanding liabilities of Rs 150 crore, gave it some breathing
space. It raised funds by selling properties in Chennai and Mumbai
for Rs 30 crore and by raising Rs 25-30 crore through a structured
financing deal. It also demerged its animation division into a separate
company, in order to unlock value, and increased its focus on the
IT, ITEs and BPO businesses. "Over the next two years, we should
be able to post a turnover of over Rs 750 crore," says Subramanian.
FACT SHEET
Adjusted share price*: Rs 14.66
All-time high adjusted share price: Rs 1,395 on February 22, 2000
Promoter: Ravi Subramanian, Chairman & CEO
Promoter's stake**: 0.03 per cent
Turnover (2005-06)#: Rs 26.33 crore
Profit (2005-06)#: Rs 3.66 crore
*As on January 15, 2007 #Figures are June-ended **As on September
30, 2006 Source: CMIE
What went wrong with the company:
Was too ambitious about e-com and dotcom. When
the IT bubble burst in US and following the 9/11 terror strike,
the company couldn't sustain large overheads. The unsuccessful
acquisition of Seranova also piled up debt that it couldn't service.
How it plans to come back:
It has paid off all its debt through a one-time
settlement and has also ventured into the animation business which
it will pursue through a separate company. Plans to focus on the
IT, ITEs and BPO spaces and grow through the inorganic route taking
advantage of labour arbitrage.
Pentamedia Graphics
Demerge and Grow
The company has demerged its exhibition business,
Mayajaal, into a separate company. Says V. Chandrasekaran, Chairman
and CEO of Pentamedia: "Mayajaal has six theatres that can
relay the same film in six languages simultaneously. It's totally
debt-free and shareholders will enjoy the benefit of its high-value
real estate holdings." Pentamedia will now look after distribution
and pre-production for its entertainment division, while Mayajaal
will take care of production. "We will also be able to sell
shares in both companies to private equity players," says
Chandrasekaran, who is also planning to enter the gaming market.
FACT SHEET
Adjusted share price*: Rs 5.52
All-time high adjusted share price: 2,130.91 on February 11, 2000
Promoter: V. Chandrasekaran, Chairman & CEO
Promoter's stake**: 0.04 per cent
Turnover (2005-06): Rs 25.1 crore
Profit (2005-06): Rs 2.53 crore
*As on January 15, 2007 **As on September 30, 2006 Source: CMIE
What went wrong with the company:
The 9/11 terrorist strike in the US. With companies
in that country going bankrupt, Pentamedia's dues weren't paid.
Result: the company's profitability was affected.
How it plans to come back:
Today, 80 per cent of the company's revenue comes
from its own work. It is also planning to enter the gaming market
and has also acquired two companies, Singapore Animasia and Kingdom
Animation, which will help with distribution and 2D animation
job work.
Himachal Futuristic Communications
Targeting the Export Market
 |
| HFCL's Nahata: Has tied up
with telecom giant Qualcomm to build CDMA equipment |
Says Mahendra Nahata, MD, HFCL: "We have now
got into the mobile technology and manufacturing space. Earlier,
we didn't have any presence in this segment; this was the real cause
of our downfall." The company has tied up with Qualcomm to
build CDMA equipment for private telecom operators and enjoys an
order book of Rs 800-900 crore, which it hopes to increase to Rs
1,500 crore in the next year. "We will focus on exporting our
products to Russia, South-East Asia and SAARC countries," says
Nahata. HFCL earned a net profit of Rs 47 crore for the first-half
ended September 2006 on revenues of Rs 475 crore. The company has
also restructured its debt of Rs 800 crore by extending the repayment
timeframe and negotiating a lower interest rate. Its alleged association
with Ketan Parekh, however, continues to haunt it. Nahata defends
himself. "It's unfortunate that we are being victimised,"
he says. -additional reporting by Nitya Varadarajan
FACT SHEET
Adjusted share price*: Rs 24.40
All-time high adjusted share price: Rs 2,552.9 on March 8, 2000
Promoter: Mahendra Nahata, MD
Promoter's stake**: 2.35 per cent
Turnover (2005-06): Rs 759.2 crore
Loss (2005-06): Rs 916.5 crore
*As on January 15, 2007 **As on September 30, 2006
Source: CMIE
What went wrong with the company:
It did not have a presence in the mobile infrastructure
and technology space. Consequently, when the landline and broadband
segments were hit by a downturn, it did not have any alternative
avenues to generate revenues from. The association of the company
and its promoter with tainted broker Ketan Parekh also had an
impact.
How it plans to come back:
HFCL has increased its focus on turnkey implementation
and now provides what it calls "complete telecom solutions".
It has also entered the mobile technology and manufacturing space
and is making CDMA equipment in collaboration with Qualcomm. This,
it hopes, will enable it to emerge as a major player in this lucrative
segment.
|
