The sale of the subsidiary Navitas Life Sciences in August 2021 to H.I.G. Capital, a global alternative investment firm, has significantly hurt the Chennai-based Take Solutions as its total revenue for the fiscal ending March 31, 2023, dropped by 70 per cent to ₹189 crore as against ₹652 crore for the previous year. This, and several other “material undertainties” such as unpaid statutory dues and unbilled receivables, have caused the company’s auditors, Sundar, Srini & Sridhar, to express their “significant doubt on the group’s ability to continue as a going concern.”
Today, on the NSE, Take Solutions’ share of face value of Re 1, closed at ₹17.50. The company launched its IPO in August 2007, for an issue price of ₹730 for shares of face value of ₹10.
Navitas accounted for 75 per cent of the company’s revenue, HR Srinivasan, Chairman of Take Solutions, told businessline. Banks hived the brand to private equity to settle debt, he added.
“This is on expected lines. We had an enforcement action by creditor banks in Singapore in May 22. There are attendant issues. We will stabilise from the current year. We are fine now. The good thing is we deleveraged completely,” he said.
The company reported a reduced net loss in FY23 to ₹100 crore (₹782 crore) as total expenses, including employee cost, reduced. There was an exceptional item of ₹10.39 crore for the fiscal representing impairment loss recognised on certain deemed investments.
Navitas delivers full-service clinical research and regulatory, and safety solutions for large blue-chip pharmaceutical and biotech clients across North America, Asia Pacific and Latin America.
During FY 2021 -22, the lender banks of one of the subsidiaries viz. TAKE Solutions Global Holdings Pte. Ltd. Singapore (TAKE Ghpte) cancelled and recalled the credit facilities of ₹463 crore in TAKE Ghpte and initiated the disposal of equity share investments in TAKE Ghpte held and pledged by the company to recover their dues by appointing the receivers.
Subsequently, in May 2022 the receivers sold the equity shares to a special purpose vehicle of H.I.G Capital Partners LLC (the SPV) for a total purchase consideration of $80 Million. Out of the consideration of $80 million, the $65 million has been appropriated towards settling secured liabilities. After deducting the consideration towards enforcement cost and other requirements, only $5.01 million (₹38 crore) was due to TAKE Solutions Limited, which is lower than net assets carrying an amount of around ₹380 crore.
The resultant impairment loss of ₹342 crore was fully provided for in the books of account during FY 2021-22. ln addition, the company has also fully impaired the loans and other advances aggregating to ₹132 crore receivable from TAKE Ghpte during FY 2021 -22.
During the year ended March 31, 2023, out of net purchase consideration of ₹38 crore accrued to the company, a sum of ₹8.22 crore is yet to be realised. The management is confident of recovering the balance amount, no provision is required against the same, the company said in the financial statement.
The sale has significantly impacted the revenue and business operations of the company and its subsidiaries. Further, during the year ended March 31 , 2023, significant number of employees of Ecron Acunova Limited (EAL) and Navitas LLP (LLP) have resigned which could affect the future business operations and cash flows of EAL and LLP and the said entities have exposure to banks the company has guaranteed.
Nearly 350 employees have resigned, Srinivasan said.
The auditors’ report also says that the group “is exploring various funding options for expansion and also expects improvement in the overall level of operations in the Generics Development Capabilities vertical as evidenced by capex and other expansion plans undertaken during the reporting period in the said business vertical. In view thereof and expecting favourable market conditions in future.”
CareEdige Ratings, in a release in March, said that with the sale of TAKE Ghapte, the operations of TAKE group had come down significantly as TAKE Ghapte had accounted for 76 per cent of the consolidated revenues and 88 per cent of the consolidated assets of the company for the period ended December 2021. For FY 2021-22, the group incurred a loss of about ₹693.3 crores from discontinued operations of TAKE Ghapte Singapore.