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Mr Nitin J. Sandesara, Chairman & Managing Director, Sterling Biotech Ltd, and Dr V.S. Sohoni, Managing Director, Rallis India, at a press conference in Mumbai. — Paul Noronha

Mumbai , Jan. 22

GLOBAL player in pharma grade gelatine, the Mumbai-based Sterling Biotech Ltd has entered into a memorandum of understanding with Rallis India Ltd, for the transfer of the latter's gelatine business into the Sterling-fold.

The acquisition has been concluded for a consideration of Rs 47 crore and the all cash deal is expected to be sealed by March 2004, subject to shareholder approval.

While for Rallis, the deal indicates a decision to concentrate on its core business, the acquisition would strengthen Sterling Bio's robust operations in the segment. Pharma grade gelatine, comprising animal bone ingredients, is used to make soft and hard capsules, besides being used for treating arthritis, cartilage related problems, blood plasma expander and bleeding disorder management.

Mr Nitin Sandesara, Chairman and Managing Director, Sterling Biotech, told presspersons here today that the acquisition would consolidate its stronghold in the global gelatine industry. Sterling offered a 30 per cent price competitiveness in the global market, he said and added that more opportunities were set to emerge with the growing gap in demand and supply, particularly as more drugs go off patents and generic drug makers get into the fray.

Touted to be India's largest exporter, besides being one of the world' largest manufacturers of pharma grade gelatine, Sterling expects the acquisition to increase its market share in the country from 40 per cent to 60 per cent. Sterling clocked a sales of an estimated Rs 200 crore in 2002 and the company expected to grow by about 35 to 40 per cent this year too.

Dr V.S. Sohoni, Managing Director, Rallis India, said that the company's manufacturing facility at Ooty, along with about 200-odd personnel would now shift to Sterling. The plant has a capacity of 2,200 tonnes.

Meanwhile, Sterling's Mr Sandesara said that the company was deploying its GDR funds in expanding its capacities. At present, the company's plant at Vadodara, Gujarat, has a capacity of about 8,200 tonnes. The company plans to expand its capacity by about 6,000 tonnes in the next 18 months, at a cost of Rs 240 crore.

Appetite for more: Mr Sandesara indicated that the company seeks both organic and inorganic growth. While the company was scouting around for suitable acquisitions in India and abroad, he was unwilling to be drawn into whether Shaw Wallace's gelatine business was on its acquisition radar. While there are about 25 companies in the world in this business, the Indian market has only three major players - Sterling Biotech, Rallis and Shaw Wallace.

More Stories on : Mergers & Acquisitions | Bio-tech & Genetics

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