Asahi Songwon Colors enters API biz via Atlas Life Sciences acquisition

The blue pigment maker buys 78% stake in the firm for Rs 48 cr to take control of Ahmedabad works

Ahmedabad-based pigments major Asahi Songwon Colours Limited on Monday announced its foray into active pharmaceutical ingredient (API) manufacturing with the acquisition of Atlas Life Sciences Private Limited.

A leading blue pigment maker globally, Asahi Songwon announced acquisition of 78 per cent in Atlas Life Sciences for an all-cash deal of Rs 48 crore, thereby taking control of the latter's manufacturing facility in Ahmedabad. The pigments company will now acquire the remaining 22 per cent stake in two tranches of 11 per cent each over the next two financial years till 2025.

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.

In addition, with Atlas Life's dominant market position in pregabalin API used to make anticonvulsant drugs, Asahi gains access to Atlas Life's existing manufacturing capacity of 25 tonnes per month leading to 90 per cent supplies to the domestic pharma majors. Besides pregabalin, Atlas Life's portfolio of products include R-compound, phenylephrine HCL, gliclazide, amisulpride and levosulpiride.

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.

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, Asahi Songwon told exchanges.

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.