AP likely to allot 500 acres to Divi's Lab for greenfield project

The company has identified land near Kakinada to set up its plant for making active pharmaceutical ingredients and drug intermediates

The Andhra Pradesh government is actively considering the request of Hyderabad-based Divi’s Laboratories Limited for the allotment of 500 acres of land, identified near Kakinada, to set up a green-field project for making active pharmaceutical ingredients (APIs) and drug intermediates.

The proposal is likely to come up for approval in the next Cabinet meeting, according to government sources. However, company officials did not respond despite repeated phone calls.

This is going to be the company's third greenfield project, which it has proposed after a gap of almost 12 years. The company had established its first plant on a 500-acre site at Hyderabad in 1999. It had set up its second plant in Visakhapatnam in 2002 in over 350 acres. Both the plants are primarily engaged in the manufacture of APIs and intermediates.

However, the site identified for this project is a part of a 2,000-acre piece of land that was acquired way back in 2008 by the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) for the GMR Group. The Bengaluru-headquartered group was planning to develop a greenfield seaport on this land as a part of the 10,000-acre Kakinada SEZ (KSEZ) project.

"Divi's needs a seaside place as the project requires a marine outfall among other things. That is why they have chosen this site,"an industry department official told Business Standard.

According to highly-placed sources in the APIIC, the GMR group had agreed to part with this land for Divi's after the government promised to partly compensate for the loss in kind. The government had offered to provide an additional piece of 290 acres available in the adjoining area to the infrastructure major, the sources said.

When contacted, a GMR spokesperson said things were still in a fluid state.

The APIIC had sent a proposal on this entire exercise to the AP government as the land is in former's possession. The state Cabinet has to consider this proposal since a Cabinet decision alone can supersede the earlier government orders issued in regard to the acquisition of the said 2,000 acre land, the officials said.

Divi's management proposes to invest Rs 750 — Rs 250 crore in the first phase and Rs 500 crore in the second — to develop this project and plans to go for groundbreaking as early as in April this year, according the proposals given to the government by the company.

In addition to certain incentives, Divi's also requested the government to double-lane the Kakinada-Vantimamidi and Annavaram-Vantimamidi roads while indicating that there would be a daily movement of 100 tankers in this stretch once the plant commences operations.

It may be recalled that the erstwhile Congress government headed by YS Rajasekhara Reddy had facilitated the acquisition of 8,000 acres of land, comprising private farm lands for the KSEZ project in which the GMR group holds majority control, directly by the developers. However, the additional 2,000 acres, mostly comprising assigned lands and partly government lands, were acquired through the APIIC.

The GMR had already paid the money towards the land, the sources said.