MUMBAI: The diversified Jubilant group is considering sale of its chemicals business to reduce debt, two people familiar with the development said.
The Noida-based group controls drugmaker Jubilant Life Sciences, which is into pharmaceuticals and chemicals. The chemicals business accounts for about half of the company's total revenue, which in 2013 stood at $1 billion or Rs 6,200 crore.
"The company wants to cut debt and focus on its core pharma business in the US markets. Hence, the management is exploring the option to monetise its chemicals business," one of the persons, who did not wish to be named, said.
Jubilant, however, termed the information "speculative". "The management does not comment on any such speculative and baseless statements," the group said in an emailed response to ET's query on the development.
Three months ago, Jubilant had announced that it was consolidating its pharma business under its Singapore subsidiary for a consideration of 1,145 crore, and exploring options for an initial public offering in the US to repay its $600-million ( Rs 3,700-crore) debt.
However, warning letters issued to the company over manufacturing practices at two of its facilities overseas have prompted some analysts to say that an IPO could be difficult at this stage. The pharma business of the company consists of active ingredients, sterile injectables and radio pharma, among other products.
"The company put a lot of effort into building its international pharma business, but none of them are doing well," said Daljit Singh, head of research at India Nivesh. "It is good that they are trying to concentrate on one business. However, it will be difficult to get high valuation for a chemicals business as compared to a pharma business."
Jubilant's chemicals business specialises in manufacture of pyridine, which is used in making disinfectants, herbicides and medicines. The product contributes close to 40% toward the company's total revenue from the chemical business.
Over the last few years, Jubilant has struggled to expand its healthcare business.
On Wednesday, Jubilant Life Sciences' shares closed down 0.49% on the BSE at Rs 131.25.
