- The 78% acquisition of Atlas Life Sciences Private Limited will be financed through a mix of Rs 28 crores of internal accruals and Rs 20 crores of debt.
- Asahi Songwon Colors will acquire an additional 11% stake in Atlas Life Sciences Private Limited each year for the next two years based on performance metrics, bringing thecompany’s equity stake to 100% by the end of FY25.
- Jagdish Sheth, the current promoter of Atlas Life Sciences Private Limited, will serve as a Joint Managing Director until March 2025.
NE BUSINESS BUREAU
AHMEDABAD, APRIL 21
City-based pigments major Asahi Songwon Colors Limited on Monday announced the acquisition of a 78% in Atlas Life Sciences Private Limited, a manufacturer of bulk pharmaceutical ingredients (APIs), for an all-cash consideration of Rs 48 crores.
The Board of Directors unanimously approved the acquisition, which includes a fully operational WHO GMP certified manufacturing facility in Odhav, Ahmedabad, a 4,000 square-foot state-of-the-art R&D facility, a 5,000 square-foot corporate office, and a 15,000-square-meter land parcel in Chhatral with EC permission for 32 products, for future expansion activities.
The pigments organization will currently get the leftover 22% stake in two tranches of 11% each throughout the following two monetary years till 2025.
In addition, with Atlas Life’s dominant market position in pregabalin API used to make anti-convulsant drugs, Asahi gains access to Atlas Life’s existing manufacturing capacity of 25 tonnes per month leading to 90 percent supplies to the domestic pharma majors. Besides pregabalin, Atlas Life’s portfolio of products include R-compound, phenylephrine HCL, gliclazide, amisulpride and levosulpiride.
With the acquisition Asahi Songwon has not only gained a fully-operational WHO GMP certified API manufacturing facility in Odhav area of Ahmedabad but also a research and development (R&D) facility, a corporate office, and a 15,000-square-meter land parcel in Chhatral with EC permission for 32 products, for future expansion activities.
Jagdish Sheth, the current promoter of Atlas Life Sciences Private Limited, will serve as a Joint Managing Director until March 2025.
While the company sees synergy between its existing chemicals and pigments business with that of Atlas Life’s API business, Gokul Jaykrishna, CEO and Joint MD, Asahi Songwon Colors Limited said that the group aimed at capitalising on the present ‘China+1’ strategy being adopted by Indian manufacturers and government’s push for local manufacturing of pharmaceuticals raw materials.
“Today marks a significant milestone in the journey of Asahi, as our Board of Directors unanimously approved Atlas LifeSciences’ acquisition. We are very excited to enter the API business through the acquisition of Atlas, a company founded and managed exceptionally well by Jagdish Seth. We are delighted to welcome the new team to Asahi and look forward to leveraging their skills and experience to help Asahi achieve its long-term goals. We hope to more than doublethe existing EBITDA margins after the acquisition, thus achieving much higher ROCE,” Jaykrishna added.
Commenting on the transaction, Arjun Jaykrishna, executive director, said, “Asahi is now on a strong earnings growth trajectory as a result of the acquisition of Atlas. As the next critical step, we will channelize our energies toward establishing the greenfield project at the Chhatral site. This will provide incremental capacity for higher-value-added products and backward integration, enabling us to more than double the existing turnover. From a business perspective, Asahi is now well positioned for growth, with the existing pigments business acting as a free cash generator, which will be aided further by the scaling up of the Azo business at Dahej in the quarters to come.”
Going forward, the company plans to add new molecules including one in the area of diabetes management, even as it plans a greenfield project at the Chhatral site in Ahmedabad. Moreover, while the facility has been catering to domestic as well as low and semi regulated markets, Asahi Songwon is now looking to get the facility an EU accreditation to tap regulated markets like Europe.
Set up in 2004, Atlas Life Sciences has reported turnover of Rs 109.28 crore for the financial year ended 2020-21, with EBITDA of Rs 7 crore and profit after tax of Rs 4.34 crore with the share purchase agreement (SPA) being executed between the two companies on April 18.
