Dishman to focus on non-European Union territories for CRAMS

Ahmedabad-based Dishman Pharmaceuticals & Chemicals Ltd (DPCL) is taking up strategic business overhaul of its European operations. The company is increasing its focus on contract research and manufacturing services (CRAMS) in Japan and overseas territories other than Europe through its Swiss subsidiary Carbogen Amcis.

"So far, Carbogen Amcis was largely focused on CRAMS activities in the US and European countries. However, in order to increase its market presence, the company has started exploring countries like Japan. The company has already started appointments there," informed a company official.

Besides exploring newer territories for CRAMS market, DPCL has also initiated business overhaul at Carbogen Amcis, where it has reduced its manpower to save on costs.

"In order to reduce its cost burden, the company has retrenched more than 80 scientists at Carbogen Amcis. This has brought down our wage bill significantly," said the official.

The changes in business model is believed to strengthen Carbogen Amcis' financial performance, which is believed to improve the consolidated performance for Dishman in the fourth quarter of the fiscal 2012.

DPCL is also looking to reduce its outstanding external commercial borrowings (ECBs), which was used for acquisition of Carbogen Amcis in 2006. "We have brought in some changes in our business model and this is likely to improve our profitability. We had borrowed about US $ 54 million through ECB for acquisition of Carbogen Amcis. So far we have been able to repay more than 50 per cent of our borrowings and with overhaul in operations, we believe we would be able to reduce our outstanding borrowings soon," said a senior company official.

It may be mentioned here that earlier this year, DPCL had acquired a French contract development and manufacturing company, Creapharm Parenterals through Carbogen Amcis.

Besides India and China, Dishman has manufacturing sites in the Netherlands, Switzerland and the UK. The company has its marketing presence in Japan, Australia, the UK and the US.

According to industry estimates, India's CRAMS sector is likely to touch US $ 7.6 billion by 2012 end from US $ 3.8 billion in 2010.

Commenting on the current business scenario, Sanjay Majmudar, director, DPCL informed that the recent currency fluctuations would limit the growth for the industry in short term. "In India, CRAMS has a huge market opportunity. DPCL's business model is such, where more than 70 per cent of the revenue comes from exports. So, long term outlook is optimistic, while there could be some fluctuations in the short term," said Majmudar.

He mentioned that the company has sufficient cash-flows and would focus on executing and completing existing projects of Rs 250 -300 crore. "We have not planned any major capex in the 2012-13," said Majmudar.

The company is likely to announce its financial results for the year ended March 2012 during May.

DPCL stocks closed at Rs 45.50 on the Bombay Stock Exchange (BSE) on Friday. The company's total market capitalisation stands at around Rs 367 crore.