Vadodara-based pharmaceutical major Alembic Pharma sold off its non-core asset, the Baddi manufacturing facility, on a slump-sale basis for an undisclosed sum to Chandigarh-headquartered pharma firm Scot Edil Pharacia Ltd.
Scot Edil plans to use the facility for exporting to emerging countries. Alembic's stocks were up in day's trade by almost three per cent in the morning.
The company said on the BSE site that it continues to meet its domestic formulation demand from its Sikkim unit and international formulation demand from its Panelav unit.
"The turnover and net worth of the said manufacturing facility for the last financial year vis-à-vis turnover and net worth of the company is insignificant," said the company's statement. Alembic Pharma Director (finance) R K Baheti said that the tax holiday for the facility was long over and the company had also not renewed the export approvals from the site. "The facility was not core to our manufacturing strengths. We have already touched full capacity utilisation at our Sikkim facility, which primarily caters to the domestic market, apart from some emerging markets. Hence, we decided to divest it," he said.
Meanwhile, it is a strategic fit for Scot Edil, which is also preparing for its initial public offering (IPO). It already has three manufacturing units around Alembic's Baddi unit and it is logistically easier for them to manage the plant. "We already have export orders and we plan to apply for approvals from emerging markets and this should take around six months time or so. We would export from the site and it would also provide capacity for our liquids business in the domestic market," said a senior official of the company who did not wish to be named.
Alembic has manufacturing facilities at Panelav (Gujarat), Karakhadi (Gujarat), and Samardung Basty, in South Sikkim's Namthang.
In FY17, it launched 40 products in the domestic market, a majority of which address lifestyle-related ailments, and also achieved full capacity utilisation at its Sikkim unit.
Alembic has invested more than Rs 475 crore during FY17 into building and expanding its manufacturing capacities. It commissioned a new active pharmaceutical ingredient (API) block in Karakhadi, doubling its API manufacturing capacity. Further, in July, it commissioned its oncology oral solids facility at Panelav.
The company is betting on the oncology segment to drive its US sales in the medium term. As such, the company expects US sales to contribute 50 per cent of its revenues by 2020.
At present, generic exports account for nearly 50 per cent of its turnover, which stood at Rs 2,985.91 crore for 2016-17. Alembic Pharmaceuticals Joint Managing Director Pranav Amin had told Business Standard that by 2020, the contribution of exports, including APIs or bulk drug exports, to its overall turnover would be around 60-65 per cent.