Sterling Biotech Aims At Expansion, GDR

New Delhi, September 29: | Updated: Sep 30 2003, 05:30am hrs
The Rs 250-crore Sterling Biotech, a year after enhancing its pharma grade gelatin capacity in 2002, is further expanding its capacity and going for backward integration with a total outlay of Rs 180 crore.

The company is exploring the possibility of raising funds in overseas markets through a Global Depository Receipt (GDR) issue and get its shares listed on international bourses. To meets its expansion needs, the company is looking at the option of funding the project through a combination of GDR, internal accruals and borrowings.

The expansion by the company will be the third in the last five years. The company now envisages to up its annual capacity by 6000 tonnes to 14,200 tonnes at Vadodara. Further, Sterling is also looking at the option to set up a bone mill plant, which will help it bring down input costs substantially.

The additional capacity, to be commercialised over the next 18 months, will largely cater to overseas markets, primarily to US and Europe.

Sterling has already received Certificate of Suitability (CoS) from the European Directorate for the Quality of Medicine, ISO 14000 from Norske Veritas and HACCP, entitling it to export its products.

The export contribution has increased over the years and from around 15 per cent last year, the export contribution is expected to grow to around 30 per cent this year, Sterling Biotechs managing director Nitin Sandesara told FE.

Sterling Biotech is Asias largest manufacturer and one of the worlds top five manufacturers of pharma grade gelatin. Sterling accounts for a market share of three per cent of the worlds total gelatin and around five per cent of global market share in pharmaceutical and nutraceutical grade gelatin.

With a growing awareness for nutraceuticals and higher preference for capsules by Indian pharma companies, gelatin manufacturers including Sterling have been adding more capacities to cater to the growing demand, he added.

With more and more Indian pharma companies introducing drugs in hard capsule form, the pharmaceutical grade gelatin market is projected to grow at seven per cent per annum.

Last year, the company commissioned its 12600 tonnes per annum by-product di-calcium phosphate (DCP) capacity and 4200 tonnes gelatin expansion project to take its total capacity to 8200 tonnes per annum. Its di-calcium phosphate capacity after last years expansion now stands at 24600 TPA.

Apart from Sterling Biotech, Shaw Wallace and Rallis India are the other major players in the Indian gelatin market and these companies together hold around 90 per cent of the total domestic gelatin market.