Rallis India managing director Vijay Rai, in a faxed response to The Financial Express, said that the company had built an additional 20,000 square ft in Belapur to look after process development of new molecules. ``The existing facilities at Belapur are being upgraded to manufacture new products which have a higher margin and more export potential,'' he said.

Rai added that two new products, pendimethalin (a herbicide) and metrabuzin were being manufactured in the state-of-the-art Belapur plant, which was capable of producing world quality products. Rallis' R&D expenditure as a percentage of turnover, however, stood at a low of 0.89 per cent in 1997-98.

Analysts say that the move could be significant, given that Rallis has been appointed the general co-distributor for all Monsanto products in India. ``Monsanto is aworld leader for herbicides and if the US giant considers sourcing some active ingredients from Rallis, it could open a window of opportunity,'' an analyst said. Besides, global trading giants Sumitomo and Fujisawa are also believed to be procuring agrochemicals from Rallis.

Significantly, while Rai maintained that there were no plans to convert the Belapur facility into an R&D unit, union sources claim that the company has been planning to consolidate its R&D activities there.

According to them, the company was working on plans to offer another VRS at Belapur and was looking at an ideal headcount of less than 100 there. The Belapur unit employed around 350 workers but this came down by around 75 following a VRS last year.

Union officials claim that the workforce at Belapur was open to a VRS, given that alleged problems on the pollution front had derailed production plans at Belapur. No official confirmation on the pollution issue could, however, be got.