Taro Pharma drops investment in wind power project

MUMBAI: Taro Pharma the subsidiary of India's largest drug maker Sun Pharma has dropped its plan to invest in the wind power project in the United States, the company said in an notification to the Securities Exchange Commission. On Tuesday, Sun Pharma too sent a notice saying that the company had decided not to pursue the project. "Subsequent to a further evaluation, these subsidiaries have decided not to proceed with this potential project", Sun said in its statement to BSE.

Sun Pharma's decision to junk the wind power project comes four days after the company announced this $250million investment in an attempt to reduce its tax liabilities in the United States. The project was to be implemented by Suzlon Energy, in which Sun Pharma Managing Director Dilip Shanghvi and its Executive Director Sudhir Valia hold substantial stake.

The move had not gone down well with few brokerage houses who had raised concerns over the company investing in an unrelated business area. Brokerage firm Credit Suisse wrote that though the tax savings were big, it came with an substantial investment of $100 million from Sun, in an area where the company had no expertise. Jefferies, another brokerage firm though maintained a buy on the stock, said the development was negative on two counts, one of them being related party transaction i.e. involvement of Suzlon Energy and investment in unrelated business.

Shares of Sun Pharma has been volatile in the last few months over concerns of its remediation efforts in its manufacturing units and integration with Ranbaxy. In the last one month, Sun Pharma's market cap has come down by 19 per cent, to 1,72,000 crore.

On Tuesday the company's shares closed at Rs 708 down by 1.50 per cent.