Novartis India Stops Tech Flow To Estranged Partner

Novartis India, 42 per cent owned by Novartis AG, has stopped all technology transfers to Cibatul, its 35:65 joint venture with Atul Products of the Lalbhai group as a prelude to the sale of its stake in the company.

Industry sources yesterday said Novartis and Atul Products have been sparring for quite some time and are likely to part ways soon. Atul Products is likely to buy Novartis 35 per cent stake in the company and gain 100 per cent control of Cibatul.

Formed when Novartis was called Hindustan Ciba-Geigy, Cibatul manufactures epoxy resin which was marketed under the brand name Araldite by Hindustan Ciba-Geigy. But in late 1996, differences in business priorities between the two partners led to talks of a break-up. Novartis formed a new joint venture with Tamil Nadu Petroproducts, Petro Araldite Pvt Ltd, to make and market Araldite. Meanwhile, Atul Products had also launched a competing product called Lapoxy through Cibatul.

 

On Friday, Atul Products sold 2.7 per cent of its stake in Novartis India at Rs 344 a share to an undisclosed buyer. The deal was brokered by Birla Marlin Securities. Sources said Atuls sale of its stake in Novartis India is likely to lead to a further dilution in ties between the two partners. Atul Products still holds 4.8 per cent in Novartis and nine per cent in Ciba Speciality Chemicals, another Novartis company, which manufactures dyestuffs and intermediates.

Atul Products managing director Sunil Lalbhai could not be contacted yesterday as he was in London. Novartis managing director Dr Venkatrao Sohoni also could not be reached as he was in the US.

Cibatul is already searching for new partners and has tied-up with Notedome of UK to manufacture polyurethanes. With the marketing back-up from Ciba being snapped, it has tied up with the Godrej group.

Sources added that Novartis has no further interest in Cibatul. On the other hand, it could utilise funds from the sale of its stake to invest in Petro Araldite.