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Hikal Limited: Caught in the Crossfire of a Family Feud

The legal battle between Baba Kalyani and his sister has reached Hikal Limited, a publicly traded pharmaceutical company. This article explores the dispute, Hikal's business overview, and the potential impact on investors.

Hikal Limited: Caught in the Crossfire of a Family Feud

The bitter legal battle between billionaire industrialist Baba Kalyani and his sister Sugandha Hiremath has taken a new turn, with Hikal Limited emerging as the unlikely battleground. The Hiremath family has filed a suit in a Pune court seeking a division of family assets, which includes Hikal Limited, a publicly traded company.

 

A Family Dispute Goes Public

This is not the first time the family feud has spilled into the public eye. In 2023, the Hiremath family approached the Bombay High Court alleging that Baba Kalyani was not honoring a family agreement to transfer all shares of Hikal Limited to them. Here's a closer look at the key players and the situation:

  • Baba Kalyani: Chairman of Bharat Forge, a leading Indian infrastructure company.
  • Sugandha Hiremath: Baba Kalyani's sister.
  • Hikal Limited: A diversified company manufacturing active pharmaceutical ingredients (APIs) with a presence in crop protection and animal healthcare.
  • Shareholding: Baba Kalyani Group - 34%, Hiremath Family - 34.84%, Public - 31.15%.

 

Despite the ongoing dispute, Hikal Limited appears to be a financially sound company:

  • Revenue: Stands at Rs 2,028 crore for FY23, with a net profit of Rs 78 crore.
  • Debt: The company has undertaken a significant debt-funded capital expenditure for expansion. However, ICRA, a credit rating agency, expects the new facilities to improve financial performance and strengthen coverage metrics.

 

The legal battle has raised concerns for investors:

  • Stock Performance: Hikal's stock price has underperformed the market, decreasing by 12% year-to-date and over 2% in the last year.
  • Uncertainty: The ongoing dispute creates uncertainty for investors regarding the company's future direction and leadership.

 

The legal battle's outcome will significantly impact Hikal Limited:

  • Management Control: The court's decision will determine which family group will have control over the company's operations.
  • Investor Confidence: Clarity on leadership and future strategy is crucial for restoring investor confidence in Hikal's stock.

 

This case goes beyond a simple business disagreement. It highlights the complexities of family-owned businesses in India, where family ties intertwine with corporate governance.

Investors are left to grapple with the following questions:

  • How will the legal battle impact Hikal's day-to-day operations?
  • Will the new leadership, if any, maintain the company's growth trajectory?
  • What are the long-term implications for Hikal's employees and stakeholders?

Only time will tell how this family feud will unfold and how it will shape the future of Hikal Limited.


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