Zydus Life Science has announced a significant update regarding its planned acquisition of Sterling Biotech Limited's (SBL) Active Pharmaceutical Ingredients (API) business. The company has extended the closing date for this strategic transaction to December 31, 2025, providing additional time to complete the deal.

Extended Timeline

The extension of the acquisition deadline marks the second such adjustment since the initial agreement. According to the company's regulatory filing:

• The original Business Transfer Agreement (BTA) was executed on September 17, 2024, with an expected completion date of December 31, 2024.
• On March 28, 2025, the first extension was announced, moving the closing date to September 30, 2025.
• Now, a further extension has been agreed upon, setting the new deadline to December 31, 2025.

Reasons for Extension

Zydus Lifesciences cited ongoing processes at Sterling Biotech as the primary reason for the extension. The company stated, "SBL is in the process of completing certain conditions precedents of the BTA." This suggests that there are still some prerequisites or conditions that need to be fulfilled before the transaction can be finalized.

Impact and Expectations

The extended timeline reflects the complexity of the deal and the importance of ensuring all conditions are met before the acquisition is completed. Zydus Lifesciences expressed confidence in the new timeline, stating that "the transaction is expected to be completed on or before December 31, 2025."

Strategic Implications

While the extension delays the completion of the deal, it also demonstrates Zydus Lifesciences' commitment to the acquisition. The API business of Sterling Biotech is likely seen as a valuable asset that could potentially strengthen Zydus's position in the pharmaceutical ingredients market.

Regulatory Compliance

The company has duly informed the stock exchanges about this development, in compliance with regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This transparency ensures that shareholders and the market are kept informed about significant changes in the acquisition process.

As the pharmaceutical landscape continues to evolve, stakeholders will be watching closely to see how this acquisition, once completed, will impact Zydus Lifesciences' market position and operational capabilities in the API sector.

Zydus Life Science , a prominent pharmaceutical company, has received a significant financial reprieve as tax authorities have withdrawn a substantial tax demand. This development marks a positive turn for the company, alleviating a considerable financial liability.

Tax Demand Details

Zydus Lifesciences announced that CGST authorities have concluded proceedings on tax demands totaling ₹39.25 crore. The authorities have dropped demands worth ₹35.90 crore while confirming a liability of ₹3.35 crore plus interest and penalty.

Resolution and Remaining Liability

The company had received show-cause notices from central excise and service tax authorities regarding alleged wrongful availment of CENVAT credit on input services from March 2008 to June 2017. Following the resolution:

• The majority of the demand, amounting to ₹35.90 crore, has been dropped.
• A liability of ₹3.35 crore, plus applicable interest and penalties, has been confirmed.

Specific Demand Details

The confirmed ₹3.35 crore demand relates to CENVAT credit on sales commission paid to foreign entities, which was treated as business auxiliary services.

Company's Response

Zydus Lifesciences has stated its intention to challenge the order by filing an appeal. The company maintains that there is no material financial impact on its operations from this remaining liability.

Market Response

Following this announcement, shares of Zydus Lifesciences closed at ₹1,018.90, down 1.57%.

Implications

The withdrawal of the larger tax demand is a positive development for Zydus Lifesciences, reducing uncertainty and potentially freeing up resources that might have been set aside for tax liabilities. However, the company still faces a smaller, yet significant, tax liability of ₹3.35 crore plus interest and penalty. The company's decision to appeal this remaining demand suggests confidence in its position, but the outcome of this appeal process remains to be seen.