Sterling buys Torrent unit for $12.3 million
deal with Gujarat Biotech (TGBL) to purchase its manufacturing unit
for Rs 55 cr ($12.3 million) in an all cash deal. Sterling's
acquisition brings it one step closer to becoming the world's
second largest gelatin maker.
Sterling Biotech chairman and managing director Nitin Sandesara said the company was planning to convert the penicillin G plant, located in Masar in Vadodara, into a facility for manufacturing gelatin derivatives by upgrading the technology.
Sterling is in the midst of a capacity expansion spree, both in India and worldwide, to meet the demands of the global gelatin market.
The global gelatin market has a turnover of about $3 billion per year with world consumption estimated at 250,000 tons.
Gelita is the main manufacturer of the product, where about 85,000 tons are produced in many countries per year.
The company acquired the gelatin business of Rallis India last year for an all-cash deal of Rs 47 crore. Rallis India is Asia's largest gelatin makers and among the top five worldwide.
Sources close to the company said it was close to acquiring a foreign gelatin firm shortly. The acquisition would help the company emerge as the world's second largest gelatin maker.
In additon, the company recently issued foreign currency convertible bonds worth $140 million (nearly Rs 630 crore).
Furthermore, the shareholders have passed an enabling resolution authorising the board to borrow not exceeding Rs 3,000 crore on requirement.
The company said it planned to raise $40 million (Rs 225 crore) soon from overseas markets.
The TGBL acquisition is part of the capex programme in the domestic front in which Sterling are looking at opportunities in the US and Europe for additional acquisition opportunities.
Sterling currently has a combined capacity of 10,400 tonne per annum from its four manufacturing units in India - more than adequate for the Indian and possibly the Asian market but inadequate for plans to expand worldwide.
Incorporated in 1991, TGBL was one of the leading new-generation penicillin G producer in the country.
The company, based in Gujarat, had in its product portfolio the entire range of ß-lactum products such as amoxycillin trihydrate, ampicillin trihydrate and cloxacillin sodium.
