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Morepen to offer scheme of Conversion of fixed deposits into equity to its FD holders
New Delhi, Jan 20, 2004

The Board of Directors of Morepen Laboratories Limited have in principle approved a proposal to offer an equity option to fixed deposit holders as recompense to the trust and patience shown by the FD holders for past 15 months. The proposal, which is subject to approval by shareholders in the forthcoming AGM of the company,. was finalized after seeking the views of the FD Brokers and the key Financial Institutions & Banks. This would give the option to the FD holders to convert their deposit amount into fully convertible debentures; and also provide reward by way of possible equity upside to 80,000 depositors who have been with the Company for a long time. The conversion is proposed to be at SEBI determined formula at the value price which would include the outstanding amount plus the overdue interest. The scheme is in the best interest of the Fixed Deposit holders, as it will enable them to liquidate their amounts at an early stage as compared to the period of four years directed in the Company Law Board Order. The equity conversion may also be extended to the unsecured creditors of the company who have supported the company.

In long term perspective, this proposal will also help the Company by easing out the current pressure on the operations of the Company due to regular outflow of funds on account of FD repayments and also help increase the shareholders' value. The uptrend in the pharma markets world wide and the boom in the stock markets in India would further help the investor to realize full potential of the equity option.

Inking the turnaround of operations
The operations of the Company have also shown an upward trend in this quarter and the company is now poised to make progress in terms of sales and profits in the Jan-Mar-04 quarter going forward.

The sales of Rs.24 crores in the December quarter represent a trend of consolidation given that this is the second consecutive quarter in which the downfall of sales of the previous three quarters has been arrested. The API exports, mainly of Loratadine to US market have contributed nearly 80% to the turnover of the company in last quarter and is further poised to increase in the current Quarter. Operations have become cash positive due to the cost cutting measures introduced by the company over the last few months.

With a very clear focus on the High margin API exports, further Plans are afoot to further augment Bulk drug sales in the high realization US and Canada markets with additional growth also planned for other regulated markets.

Rationalization of manpower has reduced staff cost & the Manufacturing and other expenses have also been brought down. the Company is taking further steps to reduce the bill of materials as also to reduce other overheads and expenses to boost margins further. These have positively impacted the EBIDTA figures and will do so going forward. An upbeat mood is permeating through the organization boosting employee morale and creating a sense of pan-Company ownership for what is clearly a revival story.

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Company law Board approves the Repayment schedule of Morepen FD holders
New Delhi, Aug 21, 2003

As a part of the debt restructuring plan to overcome the fund flow mismatch , Morepen Laboratories Limited had submitted a rescheduling plan for the fixed deposit amounting to Rs. 162 crore involving 80,000 deposit holders. Company Law Board (CLB) has passed an order to approve the repayment schedule for the Fixed Deposit holders submitted by Morepen Laboratories Limited, after the final hearing and considering the comments / objections of deposit holders. The Complaints of FD holders, who were facing delays, were taken up by CLB and had passed an order to approve Company's proposal to ensure the uniformity in repayment of funds to fixed deposit holders across the country. The rescheduling gives preference to small investors and also has a proposed additional amount of Rs. 1 crore per year for hardship cases. During the current financial year the company repaid deposits of over Rs.10 crore and as per the rescheduling plan has to further pay around Rs. 17 crore in the current fiscal year.

The highlights of the order are:

  • Depositors up to Rs. 5,000 shall be paid in full within one year from the date of maturity.
  • The entire principal amount of the depositors above Rs.5000 shall be paid in four years in varying percentages every year from the date of maturity.
  • All deposits of Rs. 5,001 to Rs. 20,000 shall be paid within 4 years from the date of maturity at 20% in first, second and third year and balance 40% in 4th year.
  • The deposits of Rs.20,001 to Rs. 50,000 shall be paid in four years of maturity at 15% the first year, 20%in second year, 25% in third year and the balance 40% in fourth year.
  • All deposits of Rs. 50,001 and above shall also be paid full within four years from the date of maturity at 10% in first year, 15% in second year, 35% in third year and balance 40% in the fourth year.
  • The company has undertaken to keep a sum of Rs. 9.00 lakh per month, total Rs.1 crore per year for payment towards hardship cases like senior citizens, medical, marriage etc. in addition to the amount needed for repayments as per schedule.
  • The interest shall be payable at the contract rate till the date of maturity and at the rate of 7% thereafter.

The approved scheme will be applicable to all fixed deposit holders of Morepen Laboratories Limited all over India, whether the individual FD's are overdue or yet to mature. The company law Board order also directed the company to treat all individual deposits as such and not clubbed if any depositor holds more than one FD. The payments shall be made in the order of date of maturity with FD's maturing earlier shall be paid before deposits maturing at a later date. The company on their part has reassured its commitment to small investors and will ensure that all the payments are made as per the schedule and the cheques would be sent to their depositors.

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