The Hindu Business Line : Dishman Pharma in $100-m pact with Saudi co

THE Ahmedabad-based Dishman Pharmaceuticals and Chemicals Ltd has signed an agreement with Arab Company for Drug Industries and Medical Appliances (ACDIMA) to set up a API manufacturing base in Riyadh.

The $100-million joint venture will have a $25-million equity component, with Dishman holding 51 per cent stake and ACIDMA 49 per cent.

The project is expected to start in July and thereafter, could take up to two years for completion. The Arab conglomerate, comprising 18 member-countries, is striving to put up the first API manufacturing base in the region, all existing facilities being limited to formulations.

According to Mr Vikram Oza, Vice-President (Finance) of Dishman Pharmaceuticals, the company would be required to contribute its equity more by way of technology transfer, training and equipment. The cash component would be less as there would be some equipment to be supplied as well, he said.

"The project will be financed up to 50 per cent by zero-interest term loans and another 25 per cent carrying a service charge of around 2.5 per cent for a 10-15 year period. Practically 75 per cent of the $100-million project will be coming as interest-free loans.

The joint venture will also allow the Rs 200-crore Dishman Pharmaceuticals to market the products in the Arab countries and also export them. The Indian company is also to supply all intermediates required for the manufacture of various APIs by the joint venture.

The Riyadh-based ACDIMA, with a paid-up capital of $169 million and net worth of $253 million, has the backing of the Capital Advisory Group set up by the Kingdom of Saudi Arabia for project finance.

This foray fits in well with Dishman's overseas plans as borne by the efforts of subsidiaries - Dishman Europe Ltd and Dishman Holland BV.

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