Morepen Labs to transfer medical devices business into a wholly-owned subsidiary

New Delhi: Morepen Laboratories Limited has initiated the transfer of the point-of-care Medical Devices business of the company on a slump sale basis to a wholly owned subsidiary of the company, which is under process of incorporation. The same is being done as provided under Section 2(42C) of Income Tax Act, 1961, for a lumpsum consideration by way of allotment of Equity Shares of Rs. 10/- each.

The revenues and profits derived from the new subsidiary will be consolidated in the parent company.

Transfer is expected to be completed on or before 31st March 2022, subject to receipt of requisite regulatory approvals and fulfilment of customary closing conditions. The company will intimate the stock exchanges once the sale is completed.

The aggregate consideration for the Medical Devices Business at fair value of Rs. 5500.00 Lakh (Rupees Five Thousand and Five Hundred Lakh Only) derived as per Rule 11UAE of Income Tax Rules, 1962, read with relevant provisions of Income Tax Act, 1961. The said consideration will be discharged by wholly-owned subsidiary company by way of issuance of up-to 5,50,00,000 (Five Crore Fifty Lakh) numbers of Equity Shares of the face value of Rs.10/- (Rupees Ten Only) each to the company.

Post this spin off, the company will be able to put entire focus on its core business of active pharmaceutical ingredients (API) and Formulations. The company has got two USFDA plants of API and is exporting the drugs to over 80 countries and that is highly specialized and technical business and needs more expertise and skills in that area. On the other hand, the medical devices business is more focused on digital and biological sciences and requires more marketing efforts to increase the reach and penetration in the Indian market.

After hiving off Medical Devices Business into wholly owned subsidiary company, a separate dedicated management will work for the development of Medical Devices Business in separate independent entity. In the second phase post hive off, the Medical Devices company would go for CE Certification of its manufacturing facilities to become the hub for PoC manufacturing in India. The new entity plans to deploy more resources on the R&D, backwards integration of core technologies like making enzymes /proteins and develop a data lab for connected devices.