Sara enters drug market

To set up Rs 12-crore Dehradun unit for herbal medicines

Dehradun-based Sara Group of Industries, manufacturer of crude-drilling equipment, is venturing into herbal medicines. A group company, Quantum Bio Health Private Ltd, is setting up a unit manufacturing herbal medicines at Selaqui near Dehradun with an investment of Rs 12 crore.

The company has entered into partnership agreements with Australia's Herb Research and Dubai's Whyte Mideast, which will provide consultancy and marketing support. The project will be a mix of debt and equity. There will be a bank loan of $2 million, and the rest will be equity contribution from the three partners.

The Indian promoter will have an equity contribution of 40 per cent, the Dubai-based company also 40 per cent, and the Australian company 20 per cent.

The unit, which will cater mainly for the export market, will come up in three phases and the first phase will be operational by October this year.

Speaking to Business Standard, V K Dhawan, chairman of the Sara Group of Industries, said, "The tendency of the people to avoid medical consultation and instead resort to self-medication seems to be increasing.

"According to a Harvard survey, use of herbal medicines by the US citizens has increased to 12.1 per cent from 2.1 per cent in 1990. In Australia, 50 per cent of the population use herbal medicines."

He said the company's aim was to be a key global player in the sector by 2010.

In the first phase (by 2008), the company will cater for markets in Latin America, the Commonwealth of Independent States, the Middle East and to select Indian metros. Exports to the US and Canada and to domestic markets in other Indian cities will start after 2008.

The company has chalked out a plan to have a turnover of $1.59 million in the first year, $3.18 million during the second year, and $7.94 million turnover after the fourth year of operation.

As per a study by the United Nations Development Programme, the global market size for herbal drugs is $62 billion and the market is witnessing a growth rate of 25 per cent a year. There are 4 billion users of herbal drugs across the globe.

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New grounds

• Australia's Herb Research and Dubai's Whyte Mideast will provide consultancy and marketing support to the company
• The project will be a mix of debt and equity, with a bank loan of $2 million and the rest comprising equity contribution
• The unit, which will cater mainly for the export market, will come up in three phases and the first phase will be operational by October this year
• In the first phase, the company will cater for markets in Latin America, the Commonwealth of Independent States, the West Asia and select Indian metros
• Exports to the United States, Canada and domestic markets in other Indian cities will start after the year 2008