Rallis sells gelatin business to Sterling for Rs 47 crore

Rallis, the Tata group's agrochemicals company, is divesting its interests in the gelatin business to Sterling Biotech for Rs 47 crore in an all-cash deal.

Rallis' gelatin manufacturing facility is located at Ooty, with a capacity of 2,200 tonne per annum (tpa). It has an employee strength of around 250.

V S Sohoni, managing director of Rallis India, said: "The divestment of gelatin business is part of Rallis' restructuring strategy. The objective is to focus on its core business of agrochemicals. The proceeds would be utilised to retire debt."

The transfer of Rallis gelatin business will be completed in March 2004. The gelatin business is part of Rallis Rs 65 crore fine chemical business.

The acquisition of Rallis gelatin business will help Sterling Biotech consolidate its presence in the gelatin industry and would increase its capacity to 10,400 tpa from 8,200 tpa at present.

Sterling enjoys a three per cent share of the international gelatine market and has 60 per cent share in the domestic market. Apart from Rallis, the other major player is Shaw Wallace Gelatines.

As part of its expansion plans, Sterling is implementing an expansion programme at its existing facility at Vadodara, Gujarat, by adding around 6,000 tonne capacity in the next 18 months at an investment of Rs 240 crore.

The project is being funded through internal accruals, loans and the recently concluded GDR issue. Gelatine contributes over 80 per cent to Sterling Biotech's turnover of Rs 189.26 crore.