Contract research and manufacturing services (CRAMS) company Shasun Chemicals & Drugs Ltd has decided to close down its Annan facility at Scotland , one of the two manufacturing facilities of its UK subsidiary Shasun Pharma Solutions Ltd, due to a deceleration in outsourcing from its UK clients. The company has another facility at Dudley in the UK .
Following a detailed and comprehensive review of customer demands and activity levels, the company has decided to close down manufacturing facility at Annan in Scotland by March 2009. The Annan facility is one of the two facilities Shasun bought out from Rhodia Pharma Solutions of France way back in March 2006. ?The Annan facility is no longer a viable one and will be closed down by March 2009,? said company sources here.
When contacted, Vimal Kumar, director, Shasun Chemicals, said: ?We have taken a decision to close down the Annan facility for want of demand from existing customers. We need to look at better economies of scale and better utilisation of our existing facilities. Accordingly, we have decided to close down the facility.?
The Annan facility manufactures actual pharmaceutical ingredients (APIs) as well as intermediaries with a total capacity of 120 cubic metre and currently serves a number of companies, he added. He said the company will move the products being manufactured at the Annan facility to its existing plants in other places, including one at Dudley and plants in India . Even the Dudley plant has enough capacity to meet additional requirements. ?We are yet to take a decision on this,? he added. Of the total strength of 86 people at Annan facility, the company will offer relocation option to only a few, he pointed out.
?We will make an attempt to rope in a buyer for the Annan facility. We did not value this facility at the time of buying from Rhodia as it came as a package. We need to evaluate.? The cost of restructuring would be met out of operating cash flow of the UK subsidiary, he added.
On the reported net loss of Rs 10.71 crore during the second quarter as against a net profit of Rs 6.89 crore during the same quarter last year, he said: ?We took a wrong side of forex hedging.? Due to steep depreciation of the rupee against the dollar, the company suffered a forex loss of Rs 13.50 crore in the second quarter. However, the revenue grew 5% to Rs 127 crore.
According to him, the formulation business, set up with an investment of Rs 45 crore, started generating revenues in a positive manner during the quarter. ?We expect 6% of the total revenue to come from formulation business, which will augur well for the company,? he said.