The Hindu Business Line : After Baddi, AP bulk drug cos now eyeing Nanded, Raichur

Attractive incentives
Nanded being promoted as exclusive SEZ for small units in drugs and pharma sectors
Offers cheaper land with additional infrastructure such as water treatment plant

Hyderabad June 4 In the last few years, it was Baddi in Himachal Pradesh. Very soon, the destination could be Nanded in Maharashtra or even Raichur in Karnataka. The attractive incentives are slowly, but surely prompting the drug manufacturers, especially bulk drugs from Hyderabad to seek greener pastures.

With neighbours Maharashtra and Karnataka making a strong pitch, and the State's own policy and environmental and real estate issues turning challenging, the small and medium enterprises (SMEs), among the large bulk drug companies around Hyderabad, are weighing options to set up manufacturing facilities there.

The fact that a new Drugs & Pharmaceutical Manufacturers Association (DPMA) has been formed recently to give a momentum to the `Chalo' Nanded efforts is a clear indication of the seriousness of the issue. Already 20-25 SMEs have given their initial consent favouring Nanded.

About six months ago, the Maharashtra Major Industries Minister and a contingent of officials, made an exhaustive presentation to the SMEs about the slew of attractive offers at the Maharashtra Industrial Development Corporation (MIDC's) Nanded area for the drug industry.

The MIDC, Nagpur, is located at Kusnoor about 75 km from Nizamabad in Andhra Pradesh. It is well connected by road, train and a domestic airport is expected soon. It is also being promoted as an exclusive special economic zone for SMEs in the drugs and pharma sectors, the team impressed on the Hyderabad-based companies.

Among the incentives are sharing of 50 per cent of the cost of a common effluent treatment plant by the MIDC, very low land cost, 99-year lease, assured power and water supply, non-SEZ land also at competitive price and a single window clearance by the facilitator, said Mr A. Venkat Reddy, Managing Director of Lee Pharma Ltd, an SME and active member of DPMA.

Not SMEs-friendly

In contrast, the AP policy is not well defined to help SMEs. The cost of land at the Government-promoted Jawahar Pharma City in Visakhapatnam is prohibitive and beyond the reach of small companies, which can also not easily afford to put in place all the pollution requirements independently, he told Business Line.

Even as the small steps towards Nanded were breaking into a trot, a team from Karnataka Government landed in the city recently and put in their best to entice the SMEs to Raichur, which, they are promoting as a favourable destination for the drug companies.

Mr M. Narayana Reddy, President, Bulk Drug Manufacturers Association of India , said: "Of late, there has been significant exodus of SMEs from Andhra Pradesh to Nanded where a SEZ for pharma industry has been created. As the land price in Nanded is around Rs 3 lakh per acre, the SMEs are finding it very affordable. Finding land in Hyderabad is literally impossible for SMEs as the price is between Rs 15 lakh and Rs 25 lakh.

"Further, in Nanded, the land comes with infrastructure such as treatment plants. We had submitted a representation to the State Government to intervene and ensure availability of land for SMEs at an affordable price. Otherwise, there would be no SMEs in Andhra Pradesh in future," he said.

High costs

Disagreeing with the contention that costs are high in the Pharma City, Mr A. Ayodhya Rami Reddy, Chairman of Ramky Group, the main promoter, said the company had invested Rs 170 crore towards installing pollution control infrastructure, which would be the best for bulk drugs manufacturers.

Out of the 1,100 acres of land under the Public-Private-Partnership project, about 450 acres have been allotted to SMEs at competitive prices. Moreover, options such as Maharashtra, Karnataka, Himachal etc. being floated are all `land locked' sites, similar to the outskirts of Hyderabad. Visakhapatnam provides the unique marine disposal, which calls for high costs, he argued.

Mr Subba Rao of Glochem, another SME, argued that for a bulk drug unit, a minimum of five acres would be required, which means around Hyderabad or even in Vizag and Pharma City, the land cost itself would run into crores. In contrast, both Nanded and Raichur are offering very low rates. However, he said Vizag had the sea advantage for effluent treatment, while the options of Nanded or Raichur would again be land locked areas like Hyderabad.

Agreeing with this contention, Mr Venkat Jasti, Vice-President of Pharmexcil and Chief of Suven Life Sciences, said land locked areas like Nanded are not definitely the long-term options to SMEs moving out of Hyderabad. Pharma City has major advantages for pollution treatment.

In his reaction, Mr Raveen K. Reddy, Director-Biotechnology, Government of AP, said: "We are studying the issue. However, there could be differences in land valuations across the States. One cannot compare Hyderabad or Visakhapatnam with Nanded in terms of development. This has to be factored in while studying the issue."

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