DRL to spend Rs 450cr on new plants, expansion

Hyderabad-based Dr Reddy's Laboratories will invest $100 million (about Rs 450 crore) in the next 18 months on capacity expansion, including setting up of two greenfield plants.

"We are scaling up our capacities for formulations, active pharmaceuticals ingredients (API) and custom pharmaceutical business (CPB). In the next 18 months we will be investing $100 million for the purpose," Satish Reddy, MD and COO of Dr Reddy's Laboratories, said here.

He said the capacity expansions would take place at the company's existing facilities at Hyderabad and Vishakapatnam.

"Besides, we are also looking at setting up two greenfield plants for formulations and other for API and CPB," he said, adding the company was looking for sites in Andhra Pradesh for the new units.

As per the planned expansion, the company is looking at having a total capacity of 8 billion tablets per year by next year, twice the current levels. By 2009, DRL is looking to double it to 16 billion tablets a year.

Asked about the funding of the expansion, Reddy said, DRL would utilise part of the proceeds of its recent fund raised by issuing American Depositary Shares (ADS).

DRL had recently raised Rs 898.47 crore ($200 million) through its 12.5 million ADS issue at a price of $16 per share.

Reddy also said DRL, which has got in-principle approval to set up SEZ, is scouting for location.

"We haven't finalised anything about the SEZ as we got the approval only about two months back. It is too early to say how big will it be and where are the locations," he added.