After having turned around its ailing Swiss subsidiary Carbogen Amcis, and putting in place capacity expansion at its Bavla site, Dishman Pharmaceuticals and Chemicals Ltd, is now aiming at doubling its Vitamin D3 capacity by FY14. Also, in order to reduce debt on its books, the company is exiting the SEZ business by selling off the land at Bavla to an infrastructure company. In a chat with Sohini Das, Dishman's chairman and managing director J R Vyas talks about the company's future plans.
What is the status of your expansion plans at Bavla?
Our expansion of the new project is completed at Bavla, which includes Vitamin D3, oncology, disinfectants, and we expect that in the financial year 2013-14 we expect these new units will give us significant revenue. For FY13, the expected PAT is around Rs 100 crore, and in FY14, it would be around 20 per cent higher.
What about the SEZ land at Bavla, have you firmed up any buyer?
We have decided that we will sell off the SEZ land. The land does not belong to Dishman, but to my family. We are in negotiations with a couple of big companies who are keen to buy the land and that will allow us to pay back Rs 100 crore debt on Dishman's books. We are nearing to close a deal with a very big infrastructure company who will set up an industrial park at the Bavla SEZ land. We had a meeting last week. I cannot reveal the company right now.
The land size is around 174 hectares, but they want around 700 acres additional land in the neighbourhood. We will sign an agreement whereby we will buy the additional land for them, while they will pay for it.
How much do you plan to raise from the deal? What would be the fate of Dishman Infrastructure that was implementing the SEZ project for you?
We will raise around Rs 500 crore from the existing land and Rs 100 crore would come from the additional 700 acres as consultancy fee. Net we plan raise around Rs 600 crore. We have not decided about the fate of Dishman Infrastructure Ltd, we can either close it down or it could also take up some other infrastructure project.
Which are segments you are bullish on in the coming years?
In the coming years we are bullish on generic active pharmaceutical ingredients (APIs) and vitamin D3 whose demand is continuously increasing in the global market. Right now, the D3 resin demand is around 40 tonnes, and we will be producing 20 tonnes, remaining 20 tonnes is produced by DSM Pharmaceuticals. And we will be doubling our capacity by FY14 at Bavla. We have already put up the units there, and an additional investment of only Rs 10 crore would be required. In five years we plan to cross at least Rs 200 crore revenues from generic APIs.
After Creapharm Parenterals earlier this year, any more acquisition plans in the coming months? Also, what kind of assets are you eying for acquisitions?
We have no plans of any acquisitions till the financial year 2014-15. Our consolidated turnover now is around Rs 1,050 crore. This year we are targeting to reach Rs 1,150 crore and next year around 1,300 crore. After replaying Rs 100 crore debt, we will have an outstanding debt of Rs 650 crore. And untill the debt situation improves, we are not looking at any acquisitions. Going forward, we look at acquiring enzymes and biopharma units that will help augment our existing business. As for capex, this year and next year, we are envisaging only incremental capacity, which would require investments of around Rs 20-30 crore. Last year we have invested Rs 150 crore in capex.