The Hindu Business Line : Shasun chalks out Rs 200-cr capex outlay

Chennai May 31 Shasun Chemicals and Drugs Ltd has chalked out a capital expenditure outlay of Rs 200 crore to enhance capability in its UK acquisition and for a greenfield project coming up at Visakhapatnam.

Shasun expects to emerge as a Rs 1,000-crore company by the end of the current year as a result of its expansion plans.

According to the Shasun's Director, Mr Vimal Kumar, the capital expenditure is to be met through debts and internal accruals. Over Rs 80 crore is to be spent on enhancing the capability at its UK subsidiary.

Shasun Chemicals acquired Rhodia's custom synthesis and contract manufacturing business in the UK through Shasun Pharma Solutions Ltd, its UK subsidiary.

Shasun Chemicals will spend Rs 120 crore on the greenfield project at Visakhapatnam to manufacture API (active pharmaceutical ingredients). The work on the 52-acre site is set to begin soon. "And, we hope the commercial production at the new facility will start in the fourth quarter of 2008-09," he said.

Global presence

Mr N. Govindarajan, CEO and Managing Director, Shasun Chemicals, said that the UK acquisition has given the company a global presence in APIs, custom synthesis and contract manufacturing. The acquisition brought with it all of Rhodia's development and custom manufacturing services to clients in the US, Europe and some Asian countries.

Shasun Chemicals also plans to set up a lab in the US. "We may even take the inorganic route for the facility in the US," Mr Kumar said.

During the current year, the company is planning to launch four-five finished dosage generic products out of the 22 it has signed to manufacture for Glenmark and Actavis brands.

"While four have already been developed, seven are in the developing stage and we will start working on the remaining 11 during the year," he said.

According to Mr Govindarajan, Shasun expects the UK unit to contribute at least 45 per cent of the expected turnover.

"We expect £50-55 million topline and £1.5-million profits from our UK unit," he said. The company expects an overall growth of 12 per cent in its net profits for the current fiscal.

Net profit up 43%

Shasun Chemicals and Drugs Ltdhas posted a 43 per cent increase in net profit of Rs 52.6 crore for the year ended March 31, 2007, against Rs 36.74 crore in the previous year. The turnover stood at Rs 793.34 crore (Rs 376.9 crore), a growth of 110.5 per cent.

Attributing the company's growth to its custom research and manufacturing services (CRAMS) business and the turnaround performance of its UK acquisition, Mr Kumar said the CRAMS business alone posted a top line of Rs 342.98 crore against Rs 37.53 crore.

Asked whether the strengthening rupee had an adverse impact on its income from exports and foreign operations, he said the company forward hedged almost 70 per cent of its export business so the impact was negligible.

The board has recommended a dividend of Rs 1.70 (85 per cent) a share of face value of Rs 2 for the year.

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