Piramal Group-promoted private equity fund India Venture Advisors has invested Rs 70 crore in Chandigarh-based bulk drugs and fine chemicals manufacturer Vardhman Chemtech Ltd, according to a senior company official.

“We have raised the money to fuel the growth plans of the company. The capital will help Vardhman expand its product base and reach,” said Suyog Jain, founder and managing director of Vardhman Chemtech.

“It (the investment) is in a way of convertible preference shares where a floor and a cap have been decided for the equity stake by the private equity investor,” added Jain.

According to him, the company is expected to see its turnover rise to Rs 370-380 crore for the current financial year. It booked a profit of Rs 12 crore in 2010-11 and a turnover of Rs 249 crore for the same period.

Vardhman Chemtech is one of the largest and integrated manufacturers of bulk drugs, intermediates and fine chemicals in the Isoxazoles segment of penicillin. Currently, the company manufactures 14 products and their variants, which it supplies to Indian drug-makers. The company also exports to key markets, such as the Far East, Indian sub-continent, SAARC countries, China, the Middle East, North Africa, East Africa, West Africa, Latin America and the Russian bloc.

“The company is on a spree to increase its manufacturing capabilities. The second plant is already in place to increase production in order to meet the increasing demand of our products. Further expansion in manufacturing, as well as in our product range, is on the cards,” the company website reads.

AK Purwar, chairman of the healthcare and life sciences-focused fund, confirmed the investment in the company. He, however, refused to divulge other details of the investment and the plan, going forward.

According to VCCEdge data, around $4.265 billion has been invested through 239 private equity deals in the healthcare and pharma sector over the past five years. Among the sub-sectors, healthcare services (1.772 billion), healthcare facilities ($1.214 billion), pharmaceuticals ($790 million) and life sciences tools and services ($265.06 million) have seen most investments during this time frame.

Pradip Kanakia, Partner and leader – healthcare, PricewaterhouseCoopers, said, “As Indian drug and chemicals manufacturers turn innovators, they build a pipeline over a period of time which helps the private equity investor get an upside to their investments.”

According to him, with the pressure on costs building up, multinational drug manufacturers will increasingly look at partnering with FDA-registered API manufacturers in India such as Vardhman.

“To be honest, the appeal for investment in this sector has always been there. But the fact that the sector has proven to be relatively risk-free in terms of returns on investments, as against other sectors, has and will continue to see investments in terms of strategic buys and private equity,” he added.

Leave Your Comment(s)