SIKKIM: Zydus Wellness plans Sikkim facility

BY VISHAL DUTTA

Zydus Wellness Ltd, the listed consumer arm of the Rs 2,900-crore Zydus group will set up a manufacturing unit at the excise free zone in Sikkim to manufacture two of its flagship products — Sugar Free and Everyuth. Currently, both the brands are produced through contract manufacturing.

Cadila Healthcare Ltd, another listed entity of Zydus Cadila Group, which is into drug making, already has a formulations manufacturing facility at Sikkim. The premises of the new facility would come up close to its existing facility.

The move comes at a time when players like Mankind and Wipro are getting aggressive in the artificial sweetener segment, which is led by Sugar Free with more than 80% share.

Says Zydus CMD Pankaj Patel, “We are investing close to Rs 30 crore in this new facility which is expected to commence operations in September.”

It is imperative for the market leader to increase its production capabilities, hence the move, sources say. “With surge in competition, you need to raise production and reach out to untapped markets before the competitor does,” says a pharma analyst. The company’s decision to have its own facility comes despite the fact that the contract manufacturers have the capability to produce 50% more.

While Zydus gets both the products contract manufactured from an excise-free zone based in North, the shift to Sikkim will make eligible for a 10-year tax holiday.

The company’s another brand, Nutralite — a healthier alternative to butter with turnover of Rs 67 crore — will continue to be produced at its existing facility near Changodar, Ahmedabad.

The cumulative growth for Zydus Wellness in the last three quarters of 2009-10 was 36%. However, sources say that the company expects growth of about 30% for next 4 to 5 years after its moves to Sikkim.

In 2008, the consumer business of Cadila Healthcare Ltd, was integrated into Carnation Nutra Analogue Ltd and was renamed as Zydus Wellness Ltd. Carnation was acquired by Cadila Healthcare in 2006.

The company’s product kitty consists of Sugar Free Gold, Sugar Free Natura, Sugar Free D’lite and Nutralite. It also caters to the skincare segment with its Everyuth and Dermacare brands.

( source:The economic times)