Tuesday, April 3, 2012

With Surya Pharma at the brink of Bankruptcy - Are there more black sheep in the Indian API Industry

Surya Pharma has shut down its plants and has asked employees to leave after paying their dues. What suddenly happened to this company which otherwise was showing superlative growth and ferociously doing acquisitions. Perhaps the state of affairs was already known to the more informed investors as the company has already shed 75% of its Market value, in the last few months. 
What is more important now, is to see that there are no more such black sheep in the Indian API industry. It seems, we might see more cats out of the bag as a majority of other companies in the sector as well are heavily reeling under debt and the looking at the coverage ratios, it seems impossible that these companies would ever pay back the debt. So there is more trouble for the banks coming in. Surya Pharma had a cumulative debt of about 1400 Cr (excluding payment to creditors - current ratio is less than one).