Divi's Labs to spend Rs. 15-bn to expand manufacturing capacity

Divi’s Laboratories Ltd., maker of active pharmaceutical ingredients (APIs) and their intermediates, will spend Rs. 15-bn to expand existing facilities over the next 15 months.

The company said it would be investing Rs. 6-bn each on its Unit-2 at the Vizag SEZ in Andhra Pradesh and Unit-1 of its Nalgonda SEZ in Telangana. In addition, it will spend another Rs. 3-bn for de-bottlenecking operations at Vizag. All the work is expected to be complete by end-December 2019. The company currently operates four multi-purpose manufacturing facilities from these two sites.

One of the largest API makers from India, Divi’s exported 87% of its products to various global pharma companies in Europe, America and other countries in 2017-18. The European market took 44% of its exports; while the US market contributed 29% to its total revenue.

Divi’s has a portfolio of 122 products, used in finished dosages and formulations across diverse therapeutic areas, from global pharma players. The company has recently reported a significant rise in revenue and profit in the September quarter. Revenues rose 47% to Rs. 13.6-bn, while net profit nearly doubled, to almost Rs. 4-bn for the quarter.

Two years before, the company had planned to build a third manufacturing facility in Kakinada (Andhra Pradesh), of a size similar to the existing sites. However, after facing issues related to land, it decided to proceed with expansion of the existing units, without waiting till these issues were cleared for the Kakinada project.

Last year, the company faced an import rap from the US Food and Drug Administration. The regulator lifted the ban in November last year, as the company was able to resolve the issues within eight months.