CDC Financial Services, the investment arm of Commonwealth Development Corporation (CDC) of the UK is picking up a 15.38 per cent stake in Ahmedabad-based Paras Pharmaceuticals Ltd for a consideration of Rs 46.8 crore ($10 million).
This is the first foreign investment being pumped into the closely-held firm which currently markets its popular 'Moov' pain reliever, 'D'Cold' cold rub, syrups and lozenges and 'Boro Soft' skin cream.
The investment is being routed through CDC's Mauritius-based investment vehicle, CDC Financial Services Mauritius Ltd. After the capital restruturing, the Indian promoters will hold the remaining equity in the company's revised paid-up capital, sources said. They added an application was filed with the government last week.
The company has registered tremedous growth during the past few years and its promoters -- the Patels -- are on record saying that any investment coming into the company will be used primarily to fund acquisition of other brands. The promoters are also cautiously weighing the option of going public, the sources added. The Patels were not available for comment.
In 1999-2000, the company's turnover had doubled from Rs 62 crore in 1998-99 to Rs 120 crore. In 1994, Paras had registered Rs 5 crore turnover which grew to Rs 51 crore in 1998.
According to officials, the company does not require money for expansion of manufacturing capacities since it is now focussing less on manufacturing and more on marketing of outsourced brands. Last year, Paras outsourced more than 30 per cent of its products and this is expected to increase this year.
Also, during the past few years, bulk of the company's turnover (over 30 per cent) came from the sale of its pain balm 'Moov'. Last year, its beauty skin cream, Freshia, made a heavy dent in the fortunes of established players such as Fair & Lovely of Hindustan Lever.
Apart from Moov and Freshia, Paras also manufacturers and markets Krack SR foot-healing antispetic cream, Stopache alengesic tablet, Itch Guard and Dermi Cool anti-infective preparations and D'Cold cough and cold tablets, lozenges, nasal decongentant and syrup.
The Commonwealth Development Corporation (CDC) was established in 1948 by the British Government with the objective of contributing to the economic development of poorer countries. CDC Financial is its investment arm.
