The company is preparing responses to the observations, which will be submitted to the agency within 15 business days. The company is committed to address these observations promptly, it said.

Shares of Shilpa Medicare hit an upper circuit limit of 5% on Tuesday (25 February) after the company said its board approved the sale of biological unit to a wholly owned subsidiary. The biological unit is currently under construction stage and not yet commenced commercial operations. Net worth of the proposed unit is estimated to be around 22% to 24% (i.e. Rs 321.77 crore approximately) on standalone financials basis. The consideration for the proposed sale will be paid in cash. The sale is expected to be completed on or before 31 March 2020 subjected to shareholder's approval.

Sale of Biologicals unit would result into operational synergies and lead to overall cost optimisation. It would result into sector focused company and facilitate for strategic investment. Facilitates to create a Biological business with a separate focused management that would provide greater flexibility in pursuing long-term growth plans and strategies. Helps the management to efficiently exploit opportunities for Biological business independently.

The stock jumped 18.97% in five sessions to end at Rs 515.20 on Tuesday (25 February) from a recent closing low of Rs 433.05 reported on 17 February 2020.

Shilpa Medicare is engaged in the business of manufacturing of bulk drugs or active pharmaceutical ingredient (API) and intermediates, and wind power generation. The company's segments include bulk drug/intermediates and energy. It deals with APIs, intermediates, formulations, new drug delivery systems, peptides/biotech products and specialty chemicals.

The pharmaceutical company's consolidated net profit surged 248.7% to Rs 55.06 crore on a 36.6% jump in net sales to Rs 236.85 crore in Q3 December 2019 over Q3 December 2018.