Jubilant hives off agri-based and polymer business

Specialty chemicals firm, Jubilant Organosys has demerged its agri and performance polymer business (APP), which it considers a non-core operation, to better align existing business.

The company, however, reaffirmed its annual outlook. After the demerger, Jubilant will create a focused life science entity of Jubilant Organosys, while the APP business would have independent operations.

Existing shareholders of Jubilant Organosys will get 1 additional share in demerged company for every 20 shares held. The demerged firm has been named as Jubilant Industries. The new entity would be publicly listed.

The name of Jubilant Organosys will be changed to Jubilant Life Sciences to better associate with its business. Jubilant Industries had sales of Rs 419 crore in the last fiscal and had operating margins of 8-10%. 

“The sales of the demerged business would not show on our financial statements now, but even without that we will continue to hold the outlook we gave out. We do not see any shortfalls in sales owing to the demerger,”   R Sankaraiah, executive director finance at Jubilant told DNA Money.

In May, the drug maker said it is looking at an order book of $1 billion in the current fiscal as it sees huge growth in the custom research and manufacturing services business.

The company continues to expect sales of $250 million from that order book to be recognised in the current fiscal and the balance would be carried forward in the next 3-4 years.

Jubilant will also merge Specialty Molecules Limited (SML), a wholly-owned subsidiary and Pace Marketing Specialties Limited (PMSL), an exclusive contract manufacturer for adhesives of Consumer Products Division of Jubilant Organosys.

“The merger of SML and PMSL will be a synergistic integration of business and will improve the managerial and operational efficiencies,” Shyam S Bhartia, managing director at Jubilant Organosys said.

SML was acquired by Jubilant Organosys in June 2008 and is engaged in manufacturing primarily pyridine derivatives used in pharma and life sciences. The shares held by Jubilant Organosys in SML will be cancelled and no fresh stock would be issued.

Jubilant Organosys will issue 501,364 shares to the shareholders of PMSL. The share exchange ratio is based on the valuation by PWC and fairness opinion by Kotak Mahindra Capital.