Old investors may not kind enough to read anything about this company if they know the main promoter of Claris Lifesciences Mr. Arjun S. Handa is the son of Mr Sushil Handa, who was the promoter of Core Healthcare Ltd (CHL). Core Healthcare was a star in Indian stock market and its share price touched four digit marks in 1990 -1994 period .It was not without a reason or because of price rigging. CHL started by Sushil Handa - an MBA- from Punjab in 1986.Its state-of -the art manufacturing facility was located in a 600 acre campus near Ahmedabad . In just seven years CHL becomes the largest manufacturer of IV Fluids in Asia with excellent growth rate . The death was equally dramatic as the growth . Company went into serious troubles and ends as a winding up case.Many points mentioned as the reason for these unbelievable fall ,some of them are following :
* Siphoning of money by the top management
*Diversion of company fund to own business
* Over aggressiveness and over expansion using leveraged funds
* Inexperience of Handa as a first generation entrepreneur
* Exports without letters of credit to countries where exports were not backed by RBI guarantees
* Crash of USSR where company had significant business interests
* Diversification to unrelated fields like power which caused for a clear loss of Rs.100 Cr
Anyway ,CHL, the company once stands almost equal to Dr Reddy's Lab ends in debt trap
It is promoted by Mr Arjun S. Handa son of Mr Sushil Handa .Company came out with an IPO in recent times.After the opening of IPO ,due to poor response - mainly on account of the above mentioned bad mark - company slashed the offer price from Rs.278 - Rs.293 to Rs.228 to Rs.235 and managed with 1.5 time subscription. Claris is one of the largest sterile injectables pharmaceutical companies in India. Company have five manufacturing facilities spread over a 78-acre campus located in Ahmedabad and it is exporting its products to 76 countries across the globe.Company's financial year ending is in December and in FY 2009 ,company posted a turnover of Rs. 744 Cr and a net profit of Rs.125 Cr .Its net sales increasing at a CAGR of 26.9% and net profit posting a strong CAGR of 65.6% over CY2005-09.Company is going to declare its FY 2010 numbers on 24 Feb 2011. On the negative side ,US Food and Drug Administrator (USFDA) issued a warning letter to the company due to violations of Current Good Manufacturing Practice .US accounts about 6 % of company's total sale.
What to do ?
Company's size,prospects and growth deserves better valuation . But everything depends on the answer of few questions - What was the real reason behind the failure of Core Health care ?.Whether it is a pre-planned drama or due to reasons beyond the control of promoters even if they tried their level best ?. Have they learned a lesson from the past experience ?
TAKE IT OR NOT , IT IS UP TO YOU ....
CMP is Rs.195/-