Panacea arm defaults; lenders may extend repayment date

India Resurgence Fund (IndiaRF) and Piramal Enterprises are in the process of extending the repayment date of the debt facility availed of by a Panacea Biotec subsidiary, after a recent default in payments, people familiar with the development said.
Panacea Biotec Pharma, a 100% subsidiary of Sputnik V Covid jab manufacturer Panacea Biotec, defaulted on payment of ₹114.67 crore including an interest component due on September 30. This is despite creditors extending the repayment schedule twice - from April 7, 2020, to June 7, 2020 and again to September 30, 2021, the people said.

Panacea Biotec, in which Adar Poonawalla-promoted Serum Institute of India holds an 8.59% stake, also makes polio vaccines and pharmaceutical products for treatment of chronic diseases, infectious diseases, lifestyle illnesses and cancer. In an emailed response to ET's questions, the company said: "There is no default on the above referred NCD, as the repayment date has been extended as per mutual agreement with the lenders."

Panacea Biotec, in its second-quarter results released on November 12, stated that the unit had delayed payments on NCDs due on September 30. IndiaRF and Piramal Enterprises did not respond to request for comment.

In all, Bain Capital and Piramal Enterprises-backed IndiaRF and Piramal Enterprises have investments of over ₹800 crore in four separate unlisted, secured non-convertible debentures of Panacea Biotec Pharma, documents reviewed by ET show. Of these, they invested ₹577 crore and ₹96 crore in two separate NCDs maturing in April 2024. One NCD of ₹41 crore was repaid by FY20, according to the same documents.


Investments in series A1 NCD with dues of ₹114.67 crore defaulted on maturity (September 30) although the company made a partial payment of ₹41.5 crore in FY20 on this instrument. All the NCDs were issued at a 20% internal rate of return, including 5% cash coupon.

The NCDs were secured by way of personal guarantees from promoters such as managing director Rajesh Jain and two executive directors - Sandeep Jain and Ankesh Jain - as well as the pledge of 65% of the holdings of the promoter and promoter group members in Panacea Biotec, the documents show. Equity shares of Panacea Biotec Pharma were also pledged.

The company raised funds from IndiaRF and Piramal Enterprises to scale up its vaccine and pharma formulations business, and expedite the development of new products. With effect from February 1, 2020, the parent company transferred its pharma formulations business; pharma formulations facility at Baddi and related R&D; and natural products extraction activities at Lalru, to Panacea Biotec Pharma by way of a slump sale on a going concern basis.