API Holdings Announces a Strategic Business Meeting

API Holdings is scheduled to hold an important strategic business meeting via video conferencing on the 27th of July, 2023, at 12 Noon. The purpose of this conference is to discuss the demerger of the Mahaveer Medicos business and its subsequent amalgamation under Ascent Wellness and Pharma.

Business Overview: The Involved Entities

Mahaveer Medicos, currently having 4 lakh shares, is predominantly owned by Ascent Wellness and Pharma. Engaged in the wholesale distribution of pharmaceutical and nutraceutical products across India, Mahaveer Medicos caters to various pharmaceutical distributors and pharmacies. Their operations span both online and offline channels. Ascent Wellness and Pharma, a majority stakeholder in Mahaveer Medicos, is a pharmaceutical supply chain company that leverages automation and innovation to enhance healthcare accessibility and affordability. Collaborating with industry giants such as Zydus Cadila, Cipla, Sun Pharmaceuticals, Abbott, GSK, Pfizer, and Torrent, Ascent offers cutting-edge solutions for large-scale hospital pharmacy segments. API Holdings, the orchestrator of the demerger, provides a wide array of delivery/logistics services, including product pick-up and delivery, to its group entities and third parties. It services a broad spectrum of the healthcare ecosystem, including wholesalers, retailers, and marketplace entities.

Demerger Objectives and Shareholder Repercussions

The rationale for the demerger encompasses several key business elements. It intends to unlock the value of Mahaveer and Ascent's respective businesses, reflecting their individual risk-return profile and cash flows. Additionally, it aims to offer enhanced flexibility in capital access and attract business-specific partners and investors. Lastly, the demerger allows a more focused management approach towards revenue growth and expansion opportunities within respective business verticals. The demerger will also impact the share distribution of Mahaveer Medicos' minority shareholders like VINOD, BHERUMAL, and NIRMALA, who will receive API holdings shares. The share conversion ratio stands at a significant 26934 API shares for every 100 shares of Mahaveer Medicos.

UnlistedZone View and Financial Performance

The demerger essentially enables the transition of Mahaveer Medicos' wholesale distribution into Ascent to streamline operational costs. Given that Mahaveer Medicos is a profitable B2B enterprise, it might follow a route similar to Byju's approach with Aakash Institute by listing separately in the future. Regarding financial performance, the revenues of Ascent Wellness and Pharma have seen significant growth, from Rs. 117 crores in FY21 to Rs. 682 crores in FY23. However, the company reported a Profit After Tax (PAT) loss, moving from Rs. 24 crores in FY21 to a loss of Rs. 124 crores in FY23. In contrast, Mahaveer Medicos has exhibited steady revenue growth, with FY23 revenues rising to Rs. 789 crores from Rs. 500 crores in FY21. The PAT also displayed a positive trend, increasing from Rs. 16 crores in FY21 to Rs. 28 crores in FY23.

Concluding Remarks

The proposed demerger represents a strategic restructuring, intending to enable individual business growth, attract more specific investors, and potentially prepare Mahaveer Medicos for a future listing. As the decision unfolds, the market awaits the resultant dynamics and potential opportunities arising from this reshuffling.

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