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Our Bureau

Chennai, May 31 KCP Biotech Ltd, the wholly owned subsidiary of KCP Ltd, which was merged with the parent company on Friday will expand and diversify its operations.

Mr V.L. Dutt, Chairman and Managing Director, KCP Ltd, said the merger would enable KCP to better support the biotech operations — manufacturing natural food colours and flavours. Following the merger, the biotech operations would now be a division of KCP just as cement and engineering.

The biotech operations had suffered in the initial years, the parent company had been supporting its operations, but the interest rates and size of operations had affected the viability of KCP Biotech despite an increasing market for its products. With the merger, the fortunes of the biotech operations are expected to improve, he said. The company manufactures food colours and flavours from chillies, turmeric and annatto, a seed material. It has a capacity to process 100 tonnes of raw material a year at the factory in Ranga Reddy district, Andhra Pradesh. Production commenced in this facility in March 2005.

Company officials said that its products are used in pharmaceutical, food and cosmetic industries. The demand is strong from China, Thailand, South Africa, Europe, Japan and lately, from Australia. It has plans to double the production capacity and diversify its product range.

The merger would give the biotech operations better financial muscle. The losses were primarily from the initial years and these continued to handicap operations, officials said. According to the merger scheme, KCP Biotech’s liabilities are estimated at about Rs 14 crore.

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