Peprazine is a pharmaceutical intermediary used by large pharmaceutical firms for the manufacture of bulk drugs and formulations such as antibacterials, antiallergics, antipsychotic and anxioltic segments.

Currently, all the peprazine consumed in the country is imported. According to a source in a pharmaceutical company, the product is very much in demand in the country. Although there are various players in the intermediate peprazine levels, no company is manufacturing basic peprazine.

The technology, developed in-house by Prem Chhabra, the current technocrat MD is reported to have been backed by Dow Chemicals, one of the largest chemical manufacturers in the world, and the supplier of the raw material for Diamines. Dow Chemicals has reportedly advanced around Rs 5 crore to this company by way of raw materials credits. Sources confirm that Dow Chemicals has also entered into a long-term agreement with Diamines to supply the raw material to the company fully on credit.

It plans to offset the raw material costs by buying back 50 per cent of the production of peprazine from Diamines. Although the company did not specifically confirm the facts, Chhabra stated in reply to a faxed questionnaire that "We propose to use the good offices of Dow for export of our products".

Such an arrangement, if it works out, would mean at least a 50 per cent reduction in working capital requirement for the company as only the difference between the raw material costs and sales value of the final product bought by Dow Chemicals would have to be offset between the two companies. The balance 50 per cent of the production would be sold by the company in the domestic market. Marketing efforts are already on.

Diamines, which was controlled by the Syntex group, was taken over by Alkyl Amines, of which Hemendra Kothari of the DSP Merrill Lynch fame is a director. The takeover was after the company ended up in the BIFR fold as a result of the market for ethylene diamines, the earlier product manufactured by the company, being opened up for imports. The terms of the takeover was such that no concessions would be granted to the new promoter, Alkyl Amines and as such the takeover could be effected without any procedural delay.

On the stock markets, the Diamines scrip has started its upward trek on the eve of the announcement of commencement of commercial production. At Rs.16.30 on the BSE yesterday, this pharma company looks a good bet.