Alembic sells Baddi facility to Scott Edil

Vadodara-based Alembic Pharmaceuticals has sold its manufacturing facility in Baddi, Himachal Pradesh, on a slump-sale basis to Scot Edil Pharacia Ltd for an undisclosed sum.

Chandigarh-headquartered Scot Edil plans to use the facility for exporting to emerging countries. Alembic’s stocks were up in day’s trade, almost by 3 per cent in the morning. It ended day’s trade at ~506 a share, up 0.07 per cent.

In a BSE filing, the firm said it continues to meet its domestic formulation demand from its Namthang unit in Sikkim, and international formulation demand from its Panelav unit in Gujarat.

“The turnover and net worth of the said manufacturing facility for the last financial year vis-à-vis turnover and net worth of the company is insignificant,” the company said in a statement.

RK Baheti, director, finance, Alembic Pharma, said that the tax holiday for the facility was long over and it had also not renewed the export approvals from the site. “The facility was not core to our manufacturing strengths. We have already touched full capacity utilisation at our Sikkim facility, which primarily caters to the domestic market, apart from some emerging markets. Hence, we decided to divest it,” he said.

Meanwhile, it is a strategic fit for Scot Edil, which is also preparing for its initial public offering (IPO). It already has three manufacturing units around Alembic’s Baddi unit and it would be logistically easier for them to manage the plant. “We already have export orders and we plan to apply for approvals from emerging markets and this should take around six month or so. We would export from the site and it would also provide capacity for our liquids business in the domestic market,” a senior official of the company, who did not wish to be named, said.

Alembic has manufacturing facilities at Panelav, Karakhadi (Gujarat), and one in Namthang.

In FY17, it launched 40 products in the domestic market, majority of which were for lifestyle-related ailments and also achieved full capacity utilisation at its Sikkim unit. Alembic invested more than ~475 crore during FY17 into building and expanding manufacturing capacities. It commissioned a new active pharmaceutical ingredients (API) block in Karakhadi, which doubled its API manufacturing capacity. In July, it commissioned its oncology oral solids facility at Panelav.

The company is betting on the oncology segment to drive its US sales in the medium term. As such, the company expects US sales to contribute 50 per cent of its revenues by 2020.

At present, generic exports account for nearly 50 per cent of its turnover (Alembic’s turnover for 2016-17 was ~2,985.9 crore). Pranav Amin, joint managing director, Alembic Pharmaceuticals, had told Business Standard that by 2020 the contribution of exports (including APIs or bulk drug exports) to its overall turnover would be 60-65 per cent.