One of the popular pharmacy faces of our country, Alembic Pharma faces drama as minority shareholders push for a board seat in Alembic to ensure better investor returns. They rallied on the bourses on Monday. Share prices of Alembic rose up to a trading of 10.71 per cent at Rs 44.45 a share during the day and due to shareholder activism. Pharma stocks, were too, were up by about 1 per cent to Rs 545.10/share. The investor community has unveiled that most of the minority shareholders (about 440 of the total 1000) were ‘created’ in the past three days. Shriram Subramanian who is the current governing body of the proxy advisory and the corporate sector of IN Govern Research Services stated that the shareholder has the right to be able to raise the voice when they feel like there is a chance of getting unlocked value. He also added saying that it is quite common is the states but is apparently something new in our country which will get some time for getting used to. The small shareholder’s community has resolved to move the then vice-president of the Unifi Capital, Murali Rajagopalachari to the core board membership of Alembic. Subramanian stated that this is usually done through the postal ballot route. Unifi Capital has around 3 percent of a stake at Alembic. But they are yet to return to the mails sent to them.
The Small shareholders who are under the aegis of the Unifi are trying to make their nominated director appointed to the Alembic board through Section 151 of the Companies Act 2013. It states that the director would be elected via the postal only by the shareholders having nominal value (less than inr 20,000).
Alembic demerged Alembic Pharma in 2011 with the purpose of pursuing the growth of formulations and other export business. The holding company Alembic also has shown interests in real estate (it has available land assets). It currently has a market capitalization of 1,190 crore INR, but holds around 30 per cent stake in the Alembic Pharmaceuticals, which currently has a capitalization of more than Rs 10,304 crore.
Subramanian says all the shareholders, thus have a general feeling that the share is being undervalued and there is a high potential which can be unlocked.
Sources in the investor community said that there are as many as 440 of these minority shareholders who were created in the last three days and several of these minority shareholders became shareholders in four months or so. Legal experts said that since this is a very precedent move, Alembic must scout all the legal possibilities in case it does not want such a move given that it’s beneficial for them.