Ajit Kamath, Chairman and Managing Director, Arch Pharmalabs said, "Inorganic growth is a strong component of our growth strategy. After acquiring the company we immediately lay emphasis on the organic growth. Both companies we acquired are profitable and have tremendous scope for expansion of capacities and also are in strict compliance with environmental standards." He added, "The acquisition of Watsol Organics will strengthen our position as leader in the Isoxazole side chains business, thus meeting the growing demand in the industry. The Sibra facility will enhance API (Active Pharmaceutical Ingredients) business and open new avenues for us."
Arch also has plans to increase its product offering in anti-retroviral drugs (ARV) segment from this acquisition. "The ARV segment has huge potential to cater to various programmes under the aegis of WHO, UN PEPFAR and other relief programmes. Arch hopes to capitalize on this market. Further, the facility will be used to cater to the demand in the CRAMS sector for API's and intermediates," said Kamath. Watsol's facility is located 60 kms from Hyderabad spans over 40 acres of which 12 acres are currently being utilised. The plant has 21 reactors with a capacity of 44KL. Watsol also helps Arch in its backward integration plans, since it manufactures a key raw material, which is used in the manufacture of the isoxazole side chains.
The Sibra facility manufactures a variety of APIs. The company has three private equity investors like ICICI Ventures, IL&FS and Swiss Technology Venture Capital Fund (SwissTec) holding 58 percent stakes in Arch Pharmalabs. Of this, ICICI Ventures holds 33 percent while IL&FS and SwissTec have 12.5 percent each. Besides the internal accruals of over Rs 30 crore and further possible funding from private equity firms, the company has got a commitment from German financial institution DEG to meet the requirements of the fresh acquisition and expansion, Apart from Hyderabad facilities, Arch is planning of investing Rs 65 crore in the Gurgaon facility, besides revamping the corporate R&D facilities to attract contract outsourcing in R&D from European and American companies.