Company Watch

Arch Pharmalabs to acquire majority stake in Avon Organics

Our News Bureau - Mumbai

The board of directors of Avon Organics passed a resolution at their meeting to allot equity shares on a preferential basis to Arch Pharmalabs at an undisclosed price. The preferential issue, together with the open offer to the public shareholders of Avon is expected to result in a majority stake for Arch and effectively transfer management and operational control to Arch. Avon, a Hyderabad based company, has a site in Sholapur, which has been inspected successfully by the USFDA recently and its Hyderabad site is a specialised site for intermediates. The company has been recently reporting losses owing to intense competition from China for one of its main product groups resulting in financial stress.

"The Avon acquisition will help us in our backward integration strategy", said Ajit Kamath, Chairman and Managing Director, Arch.

"The USFDA status will help Arch to fast forward a few product launches in the US and the intermediates plant will serve as a key sourcing base for a couple of our products which are currently market leaders in their category. We are confident of restructuring the operations, invest in assets and achieve a turnaround soon", he added. Welcoming the development, Rajesh Agarwal, Executive Director, Avon, commented, "The entry of the Arch management in our company will facilitate our various product group sales and will also help us to engage in much needed expansion to exploit the potential at each of our sites." He added, "Certain products and the positioning of both the companies will help unleash synergy across all functions."