India's Dr. Reddy's plans to issue Rs. 5.2 billion bonus debentures

By Devika Patel

Knoxville, Tenn., March 31 - Dr. Reddy's Laboratories Ltd. said it will issue up to Rs. 5.2 billion of bonus debentures by restructuring the general reserves of the company.

The company will issue three-year unsecured, non-convertible, redeemable, fully paid up bonus debentures with a principal of Rs. 5 each, in the ratio of six bonus debentures for each equity share.

"We recently completed 25 years of operations and are keen to reward our shareholders for their support and belief in the company," vice chairman and chief executive officer G.V. Prasad said in a press release.

"Over the last few years, we have built significant reserves from retained profits, by transfer to general reserves. The capital represented by the general reserves exceeds the company's current and anticipated operational needs, even taking into account foreseeable investments required for growth.

"The business is expected to continue on a high growth trajectory and generate incremental cash. In order to optimally utilize surplus reserves, the company intends to issue bonus debentures to its shareholders by restructuring the general reserves.

"These listed bonus debentures have the dual benefit of avoiding an upfront cash outflow for the company while offering shareholders the option of immediate liquidity," Prasad added.

Based in Hyderabard, India, Dr. Reddy's is a pharmaceutical company focused on cancer, cardiovascular disease, inflammation and bacterial infection.

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