Carnation Nutra Analogue Foods Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 17, 2008, has transacted the following: 1. Decided "in principle" to consolidate / restructure the Consumer Products Division of Cadila Healthcare Ltd (Cadila) (holding Company) with the business of the Company, subject to the consent of Cadila. 2. Authorised an independent director of the Company to appoint advisors / consultants / Chartered Accountants to finalise structure of scheme including valuation to determine the share exchange ratio in relation to the proposed restructuring, upon receiving consent from Cadila.

There's no clarity yet on swap ratio & whether it would be favourable to Carnation or Cadila shareholders.

From the press release:

Board of Directors of Cadial Healthcare Ltd (Cadila Healthcare) and Carnation Nutra Analogue Foods Ltd (Carnation) at their meetings held on July 04, 2008 have approved the modalities of the composite scheme of arrangement for restructuring of the Consumer Products Division of Cadila Healthcare. The Boards have approved the demerger of the Consumer Products Division of Cadila Healthcare into Carnation, which is a subsidiary of Cadila Healthcare.

As consideration, Carnation shall allot to the shareholders of Cadila Healthcare 4 fully paid—up equity shares of Rs 10 (ten) each for every 15 equity shares of Rs 5 (five) each held Cadila Healthcare. The shares of Carnation will remain listed on the Bombay Stock Exchange. By virtue of this, the shareholders of Cadila Healthcare will continue to participate individually as well as collectively in the growth of the Consumer Product Business.

The shareholders 0f Carnation will gain due to the increase in size of operations did benefits ii scale, besides synergic benefits, both in marketing through media and an enriched and efficient distribution on network.

The grouping of same line of businesses into a single entity will greatly optimize the strengths of the Company’s consumer business, which can now be more effectively leveraged. This restructuring would also facilitate better alignment of assets with priorities to accelerate the consumer business. The process is slated to be completed by early 2009.

Elaborating on the decision to hive off its Consumer Products Business into Carnation. Chairman and Managing Director, Mr. Pankaj R Patel said, "It made strategic business sense to create synergies for similar businesses and strengthen long term business prospects for the group’s consumer products business. We believe that there is a tremendous potential to grow this business and we would be better placed to unlock value through a concerted effort under a single banner. By doing this, we also create long term value for the shareholders of both companies, which has always been our endeavor."

The Consumer Products Division, which posted sales of Rs 979 mio. in 2007-08, markets wellness products, which include India's leading sugar substitute — 'Sugar Free', derma care and specialized skin care products under the brand name 'Everyuth'. A pioneering entrant in the sweetener market, Sugar Free was first introduced in 1988. Over the years, the Company has extended the Sugar Free brand umbrella to make successful forays in health beverages and also to launch the succralose variant Sugar Free Natura.

Carnation manufactures and markets Nutralite — India leading table spread as a healthier alternative to butter. Carnation, which was acquired by Cadila Healthcare in 2006, recorded the turnover Of Rs 563 mio. in 2007-08.

The salient features of the proposed composite scheme are inter alia as under:

- All assets arid liabilities of the Consumer Products Division of Cadila Healthcare shall become the assets and liabilities of Carnation w.e.f. the Demerger Appointed Date of April 01, 2008 and as consideration, Carnation shall allot 4 (four) fully pad—up equity shares of Rs 10 (ten) each for every 15 (fifteen) equity shares of Rs 5 (five) each held in Cadila to the shareholders of Cadila Healthcare.

- The Scheme is subject to the requisite consent, approval of the shareholders of all the three companies, the Hon'ble High Court of Gujarat, respective Stock Exchanges and other regulatory authorities.

The Board of Directors have approved the above restructuring after considering the recommendation of KPMG India Pvt Ltd. The share entitlement / exchange ratios have been determined based on the recommendation of independent valuers Viz. SSPA & Co, Chartered Accountant, and Grant Thornton, while M/s Singhi and Co. is acting as the legal advisors."

Yeah, disappointing scheme of arrangement for Carnation.

This thread has been dormant for so long! Request Basant and others to change the title to Zydus Wellness since it is the new name of the company.

A few points I noticed while reading up on this company.

Company has zero debt and I think about Rs 75 free cash per share. ROCE 60 and ROE 40 with sales growing 89 per cent and profits growing 113 per cent on three years' CAGR. Current P/E is around 20. Positives include rising operating margins.