NCLT Sanctions Scheme of Amalgamation: Orchid Pharma and Dhanuka Laboratories Unite

NCLT Sanctions Scheme of Amalgamation: Orchid Pharma and Dhanuka Laboratories Unite​

The National Company Law Tribunal (NCLT) has sanctioned the Scheme of Amalgamation involving Dhanuka Laboratories Limited and Orchid Pharma Limited, marking a significant consolidation in the pharmaceutical sector. The decision allows for the merger of the two companies under the terms defined by the scheme, with an appointed date set at April 01, 2024.

The amalgamation brings together the two entities—Dhanuka Laboratories Limited (the Amalgamating Company) and Orchid Pharma Limited (the Transferee Company)—into a combined entity. The sanction by the NCLT confirms that the scheme is prima facie not detrimental to the interests of the members of either company, following the fulfillment of requisite statutory compliances.

Strategic Rationale for Consolidation​

The Scheme provides a strategic rationale focused on creating a larger and more robust corporate structure. As outlined in the proposal, the amalgamation is intended to maximize value by ensuring focused management within the combined entity. Both companies are engaged in similar business operations, and the merger aims to leverage synergies between their respective businesses.

Key objectives of the proposed amalgamation include:

• Achieving economies of scale and improving the competitive position of the resulting company.
• Consolidating operations to yield beneficial results by pooling financial, managerial, technical, distribution, and marketing resources.
• Eliminating potential conflicts of interest as both companies operate in similar sectors.
• Streamlining the group structure to reduce the number of legal entities and minimize administrative costs associated with maintaining separate companies.

Financial Terms and Valuation​

The Scheme dictates the terms for shareholders regarding the merger. Based on a valuation report dated December 06, 2023, issued by SSPA & Co., the exchange ratio is defined as follows:


The structure ensures that upon the Scheme becoming effective, all properties and rights of the Transferor Companies shall be transferred to and vest in the Resulting Company. Similarly, all liabilities and obligations of the Transferor Companies are also deemed to have been transferred to the Resulting Company under the terms of the scheme.

Statutory Observations and Compliance​

The approval comes after various statutory authorities provided reports regarding the proceedings. The Regional Director, Southern Region, submitted observations noting the share exchange ratio and the continuity of service for employees of the Amalgamating Company upon the scheme's effectiveness. Similarly, the Official Liquidator offered observations regarding employee protection and the immediate fixing of the Record Date post-sanctioning the scheme.

The Income Tax Department provided its report, emphasizing that any tax liabilities related to the business of the Amalgamating Company shall be assumed and discharged by the Amalgamated Company. This undertaking is conditional on independent proceedings under the provisions of the Income Tax Act, 1961.

ORCHPHARMA Stock Price Movement​

Shares of Orchid Pharma Limited are surging at 1:19 PM today, trading at ₹907.45 as the stock rallies robustly by 7.27%. This significant move is supported by a volume of 295,107 shares, bringing the equity to dominant heights and placing it extremely close to its 52-week high range.