Mumbai Pharma FDC Intends to Segregate its top OTC Brands into Separate Entity

Mumbai-based pharmaceutical company FDC is keen on spin off its best-selling OTC brands and raise up to Rs 1,200 crore by reducing a significant minority stake, also taking advantage of overwhelming investor interest in drug manufacturers and healthcare firms.

Several development aware people reveal that the main brands to be included in the new structure include the market leaders OPC Fire Electral and Enerzal energy drink. The over-the-counter business generates an income of around 300 crores and is likely to be valued at 2, 500 crores.

The tentacles were sent to larger FMCG firms, including P&G, in addition to some private equity funds including ChrysCapital and Warburg Pincus. Management may also sell the brands in whole or sell a majority stake, depending on the proposed valuation, said one of the sources cited above.

Pricewaterhousecoopers India is working with the company to unbundle and create a corresponding new division. Electral, the top-selling oral rehydration salt (ORS) brand, has about 72 percent of the antidiarrheal drug market in India. Electral’s market share has grown from 68 percent in fiscal 19 to 72 percent in fiscal 20. Electral had revenues of around 230 crore in fiscal 20, says close source

“The FDC promoters wanted to maintain a majority stake in this proposed spin-off and expand the business with strong distribution channels for essential FMCG products in India,” one source stated.

The nearest plans are to dilute about 49 percent of the shares, he added. But, the promoters also wanted to explore the possibilities with PE investors.

Mohan A. Chandavarkar, Managing Director, FDC says, Enerzal and Electral have established themselves as wellness brands, with consumers increasingly buying them off the shelf. Recognizing that there is ample opportunity to grow these brands further as health awareness grows, the company is investing in increasing brand awareness and expanding customer reach. ”