Unichem to return 50% of proceeds from Torrent deal to shareholders

MUMBAI: Unichem Laboratories Ltd plans to return to its shareholders more than 50% of net proceeds it will receive from the sale of domestic formulations business to Torrent Pharmaceuticals Ltd. It will use the rest to expand its international business, particularly in the US.

“Post-tax, whatever funds we get from the Torrent deal will remain in the company. There are only two things we will do. One is that we want to return more than 50% to shareholders by way of enhanced dividend or buyback, and the other is (to) augment our international business. There is no third plan or idea to invest into anything else,” Prakash Mody, CMD of Unichem said in an interview.

On Friday, Unichem said it had entered into a definitive agreement with Ahmedabadbased Torrent Pharmaceuticals Ltd to sell its branded formulations business in India and Nepal for ₹3,600 crore. The boards of both companies have approved the deal, which is expected to close by end of December.

As part of the deal, Unichem will transfer its brands in India and Nepal, manufacturing facility in Sikkim and about 3,000 employees, which include domestic marketing field force and Sikkim plant workers, to Torrent Pharmaceuticals.

Unichem plans to enhance its footprint in the international markets with key focus on the US, and will be expanding capacities, improving R&D, developing complex molecules, and looking at acquisitions in the US.