Dishman Pharma to sell land to Nirma to cut debt

With over Rs 800 crore debt, company also looking at exiting Shanghai facility

Dishman Pharmaceuticals and Chemicals Ltd is in talks to sell its 175 hectares of land in Gujarat to Nirma for about Rs 650 crore to cut its debt.

The Ahmedabad-based contract research and manufacturing services (CRAMS) company is also looking at exiting its Shanghai facility, industry sources said.

Dishman did not respond to emails sent for comments and its Managing Director J R Vyas did not answer calls.

The company is looking at selling the Gujarat land to reduce its over Rs 800 crore debt, sources said, adding that Dishman plans to pay off a bank debt of Rs 100 crore from proceeds of sale of its Shanghai facility.

Talks with Nirma are in final stages, they said.

Dishman had in 2009 scrapped plans to set up an engineering Special Economic Zone (SEZ) due to global slowdown and merged it with the adjoining pharma SEZ in Bavla, near Ahmedabad.

Sources said the company is looking at exiting the SEZ business altogether by selling of the land in Gangad and Kalyangadh village near Bavla in Gujarat.

Dishman started operations at its the Shanghai Chemical Industry Park in 2012 and is currently making intermediates and speciality chemicals. The company had begun constructing the Shanghai facility in 2006.    

However, regulatory approvals from the Chinese authorities took longer than the company had anticipated and hence the facility had been a drain on the company’s resources.    

The company has decided to liquidate the Chinese assets, they said, adding that it has started manufacturing from the plant even as it looks for a suitable buyer.    

Dishman has a total debt of over Rs 800 crore, including current maturity of long term loans.

It had reported a net profit of Rs 100.3 crore on a revenue of Rs 1,272 crore in 2012-13. While the CRAMS segment constitutes nearly two-thirds of its revenues (Rs 813.25 crore), the remaining business (which includes bulk drugs, intermediates, speciality chemicals and outsourced/trade goods) contributed around 36 per cent of consolidated turnover in 2012-13.