Mumbai-based contract drug-maker Dr Datsons Labs Ltd will manufacture nutraceuticals for Belgium company Eubage.

Kannan Viswanth, Vice-Chairman and MD of Dr Datsons Labs, told BusinessLine that the company would sign a definitive agreement with Eubage in March for manufacturing 20 nutraceuticals at its Pune formulations plant.

“The renewable contract ensures revenue flow of $17 million (₹105 crore now) for 18 months. This contract would also lend visibility for the company in Europe and the US. According to the arrangement, Dr Datsons would be recognised as the manufacturer of the products under licence from Eubage,” Viswanth added. Dr Datsons has two generics manufacturing and research establishments – one in Pune and the other at Mahad in Raigad district, Maharashtra. The Pune unit manufactures pain relief pharmaceuticals (syrups and lozenges) for Glenmark and Cipla. Its excess capacity would be utilised for making nutraceuticals. The Mahad plant is engaged in developing 15 active pharmaceutical ingredients.

FCCB conversion

The company, which had raised funds through foreign currency convertible bonds, has converted bonds worth around $10 million into equity this financial year. “According to indications, the bondholders of the remaining $10 million FCCBs are likely to convert the instruments into equity in the next fiscal. This would bring up the paid-up capital of the company to around ₹11.5 crore,” Viswanath said. This would also reduce the finance cost of bonds servicing by around 10 per cent. “These conversions have brought down promoter holding from over 10 per cent in March 2014 to just about 1 per cent in January this year. Next fiscal, if further conversion takes place, there would be no promoter of the company, which would be run by professionals aided by a board comprising investment funds,” he said.

With the new revenue stream in nutraceuticals and lower finance cost, Dr Datson Labs could look forward to improvement in profit in 2015-16, he added.

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