PHLOX PHARMACEUTICALS LTD Vs. STATE

JUDGEMENT

(1.) These petitions are filed by two petitioner Companies for sanction of the Scheme of of Amalgamation proposed to be made between Phlox Pharmaceuticals Limited ( hereinafter referred to as Stransferor" Company) with Sun Pharmaceutical Industries Limited (hereinafter referred to as Stransferee" Company ) under Section 391 read with 394 of the Companies Act, 1956.

(2.) The transferor Company was originally registered on 21.4.1995 under the Companies Act, 1956 as Public Limited Company under the name of Parekh Laboratories Limited in the office of the Asst. Registrar of Companies, Gujarat, Dadra & Nagar Haveli. The Company was issued the certificate for commencement of business on 26.6.1995 and subsequently the name of the Company was changed from Parekh Laboratories Limited to Phlox Pharmaceuticals Limited under fresh certificate of incorporation issued by the Asst. Registrar of companies, Gujarat, Dadra & Nagar Haveli on 11.12.1998. The transferor company is having its plant and office at Vadodara in the State of Gujarat and it is engaged in the business of manufacture and development of cephalosporins which are the most critical products used in surgical prophylaxis (preventive treatment) and unidentified infections that cause life threatening conditions and has adequate technology to produce its pharmaceutical products. The accumulated losses as on 30.9.2002 stood at Rs.2518.81 lacs which has resulted in erosion of 100% net worth of the Company and has come within ambit of Section 3(1)(O) of the Sick Industrial companies (Special Provisions) Act, 1985 and during the year, the said Company has submitted a rehabilitation scheme for its revival with the Board for industrial and Financial Reconstruction (BIFR) and the same is pending before the BIFR.

(3.) The transferee Company is a listed public limited company having its primary base in the state of Gujarat. Its equity shares are listed at major stock exchanges in the country at National Stock Exchange & the Stock Exchange, Mumbai and the Foreign Currency Convertible Bonds (FCCB) amounting to US $350 Millions issued by the Company during November/December, 2004 are listed at the Singapore Exchange Limited. It is engaged in the business of manufacturing, marketing and trading of pharmaceutical products. The specialitiy areas of this Company are therapeutic segments like cardiology, psychiatry, neurology, gastroentrology, orthopedics, oncology, gynecology, anasthesiology, Ophthalmology, fertility management and pain management. The Company is a fast growing pharmaceutical company in the country. The turnover/income from operations increased from Rs.31.38 crores in the year 1992-93 to Rs.1042.17 crores for the year 2003-2004. The transferee Company is a profit making and dividend paying Company and it has allotted Bonus Equity shares on 8.6.2004 in the ratio of 1 Bonus Equity Shares for every one Equity Share held by those shareholders of transferee Company holding shares of the transferee company on 25.5.2004. As per the published unaudited financial results of transferee Company for the nine months ended 31.12.2004 ( without taking into account the effect of merger of the transferor Company) transferee Company recorded net profit after tax of Rs.2350.7 Millions on the total income of Rs.9944.4 Millions.