Dishman in Rs 450 cr JV with UAE firm

The Ahmedabad-based bulk drug major, Dishman Pharmaceuticals and Chemicals Ltd (DPCL), has entered into a joint-venture project with Arab Company for Drug Industries and Medical Appliances (ACDIMA), headquartered in Jordon, with a presence in over 18 Arabian countries.

As per the agreement, Dishman would now set up an Active Pharmceutical Ingredients (API) manufactuing plant alongwith ACDIMA with a cumulative investment of over Rs 450 crore. The latter would hold 51 percent stake in the new entity.

The new entity would not only cater to the demands of the API and bulk drug market in the Arab world but would also export APIs from the new facility.

Talking on the investment pattern for the project, J R Vyas, managing director of DPCL, said, "Twenty-five percent of the project cost will be financed through term loans by commercial banks in the Arab nations, while another 25 per cent will be raised through equity, jointly held by ACDIMA and Dishman. Capita Advisory Group (CAG) which arranges interest-free term loans, would finance 50 per cent of the total project cost, which is estimated at US $ 100 million. Dishman's contribution towards equity will be mainly through fees for supplying technology and training the personnel."

ACDIMA is promoted by 18 Arab nations and it has a paid up capital of US $ 169 million.

Vyas also informed that though they would prefer to set up the new facility at Jordon, they are also open to considering other locations.

"The scope of the project includes engineering solutions, installation of machinery, training of the personnel and marketing of the products, not only in the Arab nations but exporting therefrom. As a single window concept adopted by ACDIMA, Dishman is to supply all the intermediates required for the manufacturing of various APIs through the joint venture," said Vyas, adding that this was the first step wherein the Arab nations have selected an Indian partner after evaluating the capacbilities of various pharmceutical units across the globe.

Dishman acquired Manchester-based Synprotec Ltd, which has expertise in contract Research & Development (R&D) and manufacturing capabilities in UK.

Dishman is also looking for similar joint-venture possibilities in other countries including the Middle-East and Southeast Asia. While Dishman is yet to announce its fourth quarter results, in the third quarter its net profit was up by 133 percent at Rs 87.82 million against net profit of Rs 37.72 million reported in the corresponding period of the previous year.

Total income of Dishman for the quarter ending December, 2004 increased by 32 percent at Rs 442.50 million against Rs 334.25 million reported in the third quarter of the previous year.