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Dishman abandons SEZ plans
Worsening regime leads to scrapping of project
Dishman Pharmaceuticals, the Indian based pharmaceuticals and chemicals firm, has abandoned plans to set up a pharmaceutical contract manufacturing facility in a special economic zone (SEZ) in its home town of Bavla, near Ahmedabad in Gujarat state. It blamed the decision on a combination of changing government policies and the economic slowdown. Plans for an engineering SEZ had already been scrapped earlier.
According to managing director JR Vyas, Dishman has already initiated the process to sell the 163 hectares of SEZ land and expects to be completed within six months. Talks are now going on with industrial and real estate buyers. The sale should raise €75-88 million and the firm will use part of this to pay off a bank debt of €15 million.
Dishman, which also owns Carbogen Amcis and the former SynProTec, had originally aimed to entice Indian and multinational drug and chemical manufacturers to the site in order to access the burgeoning Indian market. Johnson & Johnson, Solvay, Bayer, Lonza and Sun Pharma were all linked with it at some point, though it is unclear whether any of them had actually set up operations there.
Recently, many observers have said that the SEZ model had not turned out to be as attractive as it had first appeared, because of the Indian government’s decision to impose taxes from which they were originally exempt, the bureaucracy in the approval process and the difficulty in acquiring enough land. The total number of applications fell from 39 in 2009 to 14 in 2011.
The Bavla project as a whole dates back to 2006. In August 2008, just before the economic downturn, Dishman announced that it had completed the acquisition of land for its pharmaceutical SEZ and it laid the foundation stone that December. Construction work began in 2010. The company originally planned to invest about €75 million in the two SEZs but had to abandon the engineering SEZ in 2009, because of the global slowdown, and merged it with the adjoining pharmaceutical SEZ.