Vimal Kumar, whole time director, Shasun Chemicals and Drugs Limited, talks
on the integration of his companies'' acquisitions in the UK .
It takes two to tango. S Vimal Kumar, whole time director, Shasun Chemicals and
Drugs Limited, would readily agree with that. For Shasun Chemicals, and its wholly
owned UK subsidiary Shasun Pharma Solutions Limited, that means working in tandem
towards a common goal - a higher share in contract research and manufacturing
may be recalled that the Chennai-based bulk drug company Shasun Chemicals made
it''s maiden acquisition of two plants in the UK from the French drug company Rhodia
SA, in 2006 through Shasun Pharma Solutions. The operations were subsequently
integrated with that of the parent company.
integration was smooth. We retained the top management and did not reduce the
workforce," he says. Today, a common marketing team meets prospects to sell
the services of the parent as well as that of the subsidiary companies. Depending
on the customer''s preference and other aspects, the location of executing the
orders are decided," says Kumar.
UK operations have contributed handsomely towards Shasun Chemicals'' consolidated
revenues, which will be in the region of Rs780 crore for FY07. The company is
fast moving towards the magic figure of Rs1,000 crore.
Here Kumar talks in detail about the integration and also about Shasun Chemicals''
were the challenges faced in integrating the UK operations with that of the parent
There were no major challenges. In fact, the integration was easy.
Not wanting to disturb the existing setup, we retained the top management at the
acquired plants. We put one of our men there and also hired a chief financial
officer who is of Indian origin, but based in the UK. The focus of the UK and
the Indian operations are entirely different.
didn''t reduce the workforce at the UK, as the erstwhile owners had already done
that. Instead, we added people. The people at the UK plants are excited, as the
activity levels have increased. For Shasun Chemicals, the Rhodia acquisition has
given it a global positioning.
did you synergise the Indian and UK operations?
We have asked the UK sales
team to market Shasun Chemicals'' CRAMS capability. There is an exchange of knowledge
amongst all our centres and research projects. The hardware and software needs
of the UK and Indian operations have been standardised. We will soon implement
an ERP solution in India as the UK operations already has one in place.
the challenges faced in retaining Rhodia''s client base
99 per cent of Rhodia''s customers. Only one or two quit because they were having
their work done at Rhodia''s laboratory in the US, which was not acquired by us.
Post acquisition, there is 15 per cent top-line growth. Within two months of takeover,
we won over two clients, and one of them is a large innovator company. The CRAMS
business in the UK leans more towards patented products, whereas in India it bends
towards products that are going out of patent. It has a proven advantage as we
can expand the product range. Shasun Pharma has posted a turnover of 41 million
pounds. We are looking at a top-line growth of 18-20 per cent this year.
is the learning you had with this acquisition?
The UK operations are more
system-based. We would like to replicate the same here.
you have any plans to acquire a lab in the US?
We are looking at a R&D
lab and a pilot plant in the US to cater to emerging clients there.
the performance of Shasun Chemicals during FY 07
The top-line logged
double-digit percentage growth; with last years'' major growth driver being Ibuprofen,
which registered both a value and volume increase. The bulk drug accounted for
54 per cent of the company''s turnover. If one looks at the consolidated numbers
then Ibuprofen''s share in the total turnover is 29 per cent.
the other hand, sales of ranitidine came down by around 15 per cent, but this
year we expect the volume to increase by 40 per cent. The other bulk drug nizatidine
logged some growth, giving us revenues of Rs77 crore. However, during this fiscal
(FY 08) we expect revenues from nizatidine to be in the region of Rs70 crore,
and later stabilise at around Rs75 crore.
have started commercial sales of gabapentin for the US market, and the expected
turnover for this fiscal is around Rs16 crore. During the course of this year
we will start formulation sales. The CRAMS business of Shasun Chemicals logged
30-35 per cent growth during FY 07, and good growth is expected for next couple
the status of your Vishakapatnam plant
We are running out of capacity
at our existing facilities at Cuddalore and Pondicherry. Hence we found the new
plant to be a necessity. We chose Vishakapatnam so as to locate the new plant
in a special economic zone (SEZ). However, the project is delayed on account of
issues connected with the SEZ. The idea is to make active pharmaceutical
ingredients at Vizag. We will first set up a commercial pilot plant, and later
scale up capacity. The outlay for the new plant will be Rs110 crore, and will
be funded out of internal accruals and debt.