S L PHARMACEUTICALS

PROJECT REPORT

ON MANUFACTURE OF

BULK DRUGS AND INTERMEDIATES

S L PHARMACEUTICALS

OFFICE

F.No:407,Mallikarjuna residency,

Bramarambikanagar colony,

Beeramguda,Ameenpur Mandalam,Sangareddy District

Telangana State.

S L PHARMACEUTICALS

CONTENTS

A. Glimpse

B. Brief Details of the Project

C. About Promoters & group concern

D. Product Description

E. Market Survey

F. Infrastructure facilities

G. Technical Know-How

H. Selling and Marketing Arrangement.

I. Swot Analysis

J. Risk factors and mitigation

K. Proposed Layout of Plant

S L PHARMACEUTICALS

G L I M P S E

Name of the Unit : S L Pharmaceuticals

Constitution : PROPRIETORSHIP

.

Proposed Location of Unit : APIIC Industrial Park

Jaggaiahpet,Krishna district, Andhra Pradesh

Corporate Office : F.No:407,Mallikarjuna residency, Bramarambikanagar colony, Beeramguda,Ameenpur,Mandalam, Sangareddy. District.Telangana State.

Line of Activity : Manufacturing and sales of Bulk Drugs & Intermediates, Contract Manufacturing

Installed Capacity

: 102 TPA

Proprietor ; Ms..M.Sreenivasa Rao

S L PHARMACEUTICALS

COST OF PROJECT:

Particulars

Land Building,Civil works& site developmen

Plant and Machinery Furniture,Fixtures and other assets

Preliminary Pre operative Liasoning work

Marginal money for working capital

Total Means of Finance Promoters Capital

Term loan

Amount Rs in Lacs

45.96 90.23

307.30 7.00

8.50 10.00 30.00

498.99

175.00

323.99

Brief Details of the Project:

S L Pharmaceuticals was proposed by technocrat of varied experience, with the main object of producing Bulk drug intermediates & Contract Manufacturing of the Bulk Drugs for MNCs, with its office situated in Hyderabad, considered as capital of Drugs and Pharmaceutical companies in India. The Company proposed to take 1313.29 sq.mtrs of land in Jaggaiahpeta industrial park,Krishna dist. of Andhra Pradesh.

The company will do contract manufacturing in initial phase. Then start own Manufacturing of Bulk drugs and their intermediates.

The company is planning to set-up in house R & D facility to develop new products.

The plant is designed for production of any product at any time, depending upon prevailing demand, without making any major alteration to the equipment.

Total 498.99

S L PHARMACEUTICALS

Building and Civil Work:

The company has planned to construct the basic structures required for housing the

machinery & equipment, stores at a cost of Rs.90.23 lakhs. The buildings are planned

to complete before November - 2018 for erecting the machinery & equipment. A

detailed statement of area-wise civil works completed by the Company as on date is

prepared.

Plant & Machinery:

All the Plant and Machinery required for the proposed project would be procured

indigenously and the details of the same are given below.

Unit Total cost

price in

in Rs B Equipments Capacity Nos Rs

SS Reactors

1 SS reactor 3.0 Kl 2 1200000 2400000

2 SS reactor 2.0 Kl 1 1000000 1000000

3 SS reactor 1.6 Kl 2 900000 1800000

4 SS reactor 1.0 Kl 2 800000 1600000

5 SS Rector 4.0 KL 1 1400000 1400000

Total cost 8200000

C GLR Reactors

4 GL Reactor 2.5 KL 1 1500000 1500000

5 GL Reactor 1.6 KL 1 1000000 1000000

Total cost 2500000

D Condensers

8 SS condenser 12 SQM 3 300000 900000

9 SS condenser 10 SQM 3 275000 825000

10 SS condenser 8 SQM 3 250000 750000

11 Glass condenser 10 Sq m 1 300000 300000

12 Glass condenser 6 Sq.m 1 200000 200000

Receivers 1000000

Total cost 3975000

E Centrifuge

14 S.S 36 inches 1 250000 250000

15 S.S 48 inches 1 500000 500000

Total cost 750000

F Filters

16 Nutch filter- Pressure 100 ltr 1 150000 150000

Total cost 150000

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G Dryer

17 Tray dryer 48 trays 1 500000 500000

18 Vacuum tray dryer 24 trays 1 400000 400000

Total cost 900000

H Vacuum Catch pots

20 MS vacuum pots 50 ltr 2 75000 150000

Total cost 150000

I Utilities

1 Brine circulation compressor 20 TR 1 600000 600000

3 cooling tower 400 TR 1 300000 300000

4 Gen set 250 KVA 1 650000 650000

5 DM plant 3000 ltrs 1 150000 150000

6 Boiler 1 tonn 1 700000 700000

7 Softener 1 1 75000 75000

8 Electrical transformer 250 KVA 1 350000 350000

9 Hot water circulation system 2 200000 400000

Total cost 3225000

J Pumps & Motors

1 Brine circulation 2 75000 150000

2 Cooling water 2 75000 150000

3 Scrubber set up 150000

4 Vacuum pumps-- Ejector type 2 75000 150000

Total cost 600000

K Labs

1 Lab ware 250000

2 Fuming Hood 1 100000

Total cost 350000

L Instrumentation

1 GC 1 600000 600000

2 HPLC 1 900000 900000

3 Computers 3 30000 90000

4 Printers 3 7500 22500

6 Ups system 1 200000 200000 25

7 EPBX system channels 1 45000 45000

8 Temp indicators/sensors 20 7500 150000

9 Electronic Weighing balance 150.00 kg 2 15000 30000

10 Lab analytical eqpt 200000

11 Cables and switches 600000

Total cost 2837500

M Erecting and commissioning

1 Valves 75 9500 712500

2 Steam traps 10 3250 32500

3 Pressure gauges 25 1000 25000

4 Safety valves 25 1000 25000

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5 Pipe lines 450000

6 Erecting and commissioning charges 850000

Total cost 2095000

N ETP

1 MEE system 4000000

2 Accessories Etc., 1000000

Total cost 5000000

O Furniture and Fixtures Ac 4 25000 100000

Tables 6 3000 18000

Chairs 20 1500 30000

Stationary 10000

Canteen utilities 15000

Fitting charges 10000

Total cost 183000

P Miscellaneous Office works 167000

Consultancy 300000

Approvals 300000

Total cost 950000

Q Total cost 31680000

Furniture fixtures and other Assets:

The furniture and fixture proposed to be purchased include production furniture, fixture

involving production tables, workers stools, office cabinets and racks, executive tables,

chairs, office filling cabinets. Vehicles will be purchased for facilitating movements or

workers and materials.

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Implementation Schedule:

Activity Time frame for completion

Acquisition of land and Land to Acquire

development

Construction of factory To Be Started after Obtaining CFE

buildings Plant and Machinery.

Process Equipment

Trial Run

Commercial Production

-

Order to be placed after get the EC

-

- November-2018

December-2018

Preliminary and preoperative expenses:

Preliminary and preoperative expenses are estimated at Rs. 8.50 lacs from the start up

time of this project till the commencement of commercial production. The expenses

include Rents, travel cost, salary and wages, legal and professional charges and

interest during the construction period. The cost also includes the expenses incurred in

the production trial runs before commencement of commercial production.

S L PHARMACEUTICALS

THE PROMOTERS:

Ms. M.SREENIVASA RAO, B.Tech Chemical,

PRODUCT DESCRIPTION

Intermediates which are the active ingredients with medicinal properties and are the best

raw materials for making Bulk Drugs and Formulations which are specific dosage forms

of a Bulk Drug or of a combination of different Bulk Drugs and the final form in which the

drugs are sold i.e. syrups, injections, tablets, and capsules.

The Company proposes to manufacture the following products and their intermediates.

LIST OF PROPOSED PRODUCTS

S.No. Name of the Product

1 Lansoprazole

Losartan Potassium

3 Lisinopril

4 Levocetirizine dihydrochloride

5 Rabeprazole Sodium

6 Pantoprazole Sodium

7 Itraconazole

8 Fexofenadine Hydrochloride

9 Ciprofloxacin

10 Pregabalin

11 Domperidone

12 Esomeprazole Magnesium trihydrate

S L PHARMACEUTICALS

MARKET SURVEY

The field of Bulk Drugs and intermediated is broad-based. It covers all products and

preparations used in the production of pharmaceutical formulations. The bulk drugs

industry segment in India has been able to establish its presence in the international

markets and more than 60 percent of its produce is exported. This segment has

managed tremendous growth, with production of only Rs. 0.18 billion in 1960, rising to

Rs. 10.0 billion by 2005 and hence meeting 70 percent of the domestic requirement.

The segment is a net foreign exchange earner producing export quality drugs; with bulk

drugs export accounting for 60 percent of the total pharma industry exports. Exports of

bulk drugs are growing by 30 percent per year. But given the size of the world market,

supply from India is miniscule India s exports account for only 1.0 percent of the

worldwide demand. In terms of the inputs used in production of drugs the industry faces

low cost of inputs at competitive rates helped by the presence of a well developed

chemical industry.

As the manufacture of most bulk drugs is neither capital intensive nor technology

intensive, process re-engineering encouraged the growth of production bases. There

are a large number of bulk drug manufacturers in India, including many small scale

industries. This has increased competition, leading to a drop in prices and consequently

lower margins. Most bulk drugs under the DPCO sell below the government

administered prices due to stiff competition and lower import tariffs.

PHARMACEUTICAL INDUSTRY GLOBAL SCENARIO

S L PHARMACEUTICALS

As per IMS Retail Drug Monitor, sales through pharmacies in thirteen leading markets

for the year to August 2003 are $ 298.7 Billion. According to the IMS World Review, in

2004, global audited sales of pharmaceuticals rose 8% (at a constant dollar rate) to

reach US $ 400.6 Billion. IMS world Review tracks actual sales of approximately 90% of

all prescription drugs and certain over-the-counter (OTC) products in more than 70

countries. Using proprietor data projection methodologies to estimate total global

pharmaceuticals sales, which grew to US $ 430.3 Billion in 2005. Despite economic

challenges in the worlds leading markets and a lower-than-normal number of new

product introductions, the global pharmaceutical industry experienced good growth in

2005.

PHARMACEUTICAL INDUSTRY DOMESTIC SCENARIO

The Indian Pharmaceutical Industry today is in the front rank of India s Science-based

industries with wide ranging capabilities in the complex field of drug manufacture and

technology. The Indian Pharmaceutical industry is estimated to be worth US $ 8.0

billions at present, growing at a CAGR of over 15 % annually. If India s high

Economic growth rate holds steady, the pharmaceuticals market will triple to $ 24 billion

by 2015 and become one of the world` s top 10 markets according to a study by

McKinsey and company ,a leading management consulting firm. At a compounded

annual growth rate of 15.0 %, the absolute growth of $ 24 billion will be next to the

growth potential of the US and China, and in the same league as the growth in Japan

and Canada and the UK. Five factors will drive the growth of the Indian

Pharmaceuticals market over the next decade; Doubling of disposable incomes and the

increase in numbers of middle class households , significant expansion of medical

infrastructure, greater penetration of health insurance, a gradual shift in disease profile

and adoption of patented products, and finally population growth.

S L PHARMACEUTICALS

It ranks very high in the third world, in terms of technology, quality and range of

medicines manufactured. Playing a key role in promoting and sustaining development in

the vital field of medicines, the Indian Pharmaceutical Industry boasts of quality

producers and many units approved by regulatory authorities in USA and UK.

Internationally Companies associated with this sector have stimulated, assisted and

spearheaded this dynamic development in the past 50 years and helped to put India on

the pharmaceutical map of the world.

The Indian Pharmaceutical sector has more than 20,000 registered units. It has

expanded drastically in the last two decades. The leading 250 pharmaceutical

Companies control 70% of the market. The pharmaceutical industry in India meets

around 70% of the country s demand for bulk drugs, drugs intermediates,

pharmaceutical formulations, chemicals, tablets, capsules, orals and injectables. There

are about 250 large units and about 8000 small Scale Units, which form the core of the

pharmaceutical industry in India (including 5 Central Public Sector Units). These units

produce the complete range of pharmaceutical formulations, i.e. medicines ready for

consumption by patients and about 350 bulk drugs, i.e. chemicals having therapeutic

value and used for production of pharmaceutical formulations.

PHARMACEUTICAL INDUSTRY Hyderabad and Bangalore SCENARIO

Hyderabad has emerged as major drug manufacture city with a presence in global

market. Pharma industry in the state contribute more than one third to the country s total

production. During 2005-06, the State produced bulk drugs and formulations worth US $

2.5 billion.

The exports from the state stood at US $ 1.0 billion in 2004-05 registering an annual

growth of more than 20%. The sector accounts for about 20 % of the total exports from

state.

S L PHARMACEUTICALS

Most of the companies have set up their R&D facilities in the state, thus making the

state the pharmaceutical capital of the country.

Hyderabad has developed as a major production center for bulk drugs due to the

location if the many major Pharmaceutical Industries such as Dr. Reddy s Laboratories,

Aurobindo Pharma, Neuland Laboratories, Siris, Hetaro Drugs, Divis Labs, Natco

Pharma Limited, Matrix Labs, Nicholas Piramal etc., besides a large number of medium

and small industries manufacturing bulk drugs of all kinds.

Bangalore has a large no of chemical, Bulk drugs and intermediates manufacturing

units. Bangalore has large no of MNC and small manufacturers having there

manufacturing and R&D centers.

To name a few Ge, AstraZeneca, Biocon, Cipla, Strides Arcolab, Himalaya drugs,

Karnataka antibiotics and pharmaceuticals ltd, Hinkle and Micro labs.

In support of this growth in Hyderabad and Bangalore, many basic chemical units and

drug intermediate units have also come up to meet the input requirements of Bulk Drug

manufacturing Companies. Large numbers of these units are still dependent on supply

of basic chemicals mainly from Mumbai, Gujarat and other parts of the country involving

heavy expenditure on transport and transit risks.

So, considering the above factors, it is assured that setting up of basic drug

intermediate will be of better prospect as we can meet the needs of the Bulk Drug units

located in and around Hyderabad. The products can be supplied to the bulk consumers

speedily and at lower prices reducing transport cost and time and transit risks. The

products can also be exported easily of proper marketing tie-ups are made with the

overseas bulk drug manufacturers in the due course as there is good export potential

for the basic drugs and intermediates.

UTILITIES

S L PHARMACEUTICALS

a) Power

Requirement of power and its arrangements:

The company 250 KVA. power connection required for the proposed project from state

electricity board. The company also proposes to acquire 1 DG set of 250 KVA as stand

by arrangement.

b) Water Requirement

of Water

The unit requires about 42,300 liters (42 m3) of water per day for process and other

uses. The area has good ground water source and the required amount of water can be

obtained by Bore well.

c) Man power:

The man power requirement of project is as under:

Particulars No. of Functional Area

employees

Key managerial staff 2 Finance, Marketing, Production, Quality control, R&D, Logistics etc.

Administration 5 Office work

Skilled and semi 33 Production Process, Maintenance, stores, skilled Safety.&Un skilled workers

Total 40

Qualified and Skilled man power is available in and around

Jaggayyapeta,Vijayawada both on permanent and temporary basis. We can also utilize

services of experts on ad-hoc basis for production of specialty products.

The company is planning to have good team of employees in all areas. Looking in to

long term planning, company will take all the necessary steps to develop a good team of

S L PHARMACEUTICALS

work force. The company will provide all basic amenities to staff such as Medical

Health, children education, transport, canteen facility, transport, clothing, financial

assistance, family welfare etc.

The company will organize training classes for all the staff in the areas of Process up

gradation, Quality control, cost reduction techniques, safety etc.

d) EFFLUENT (WASTEWATER), SOLID WASTE TREATMENT & DISPOSAL:

The industry shall adopt and follow an environmental management plan for abatement

of pollution and overall enhancement of the quality of environment in and around the

unit.

About 20.0 KL / day of effluent (wastewater) is generated from process and utilities. The

Company proposes to have a full pledged Effluent Treatment Plant (ETP) to treat the

effluent as per the norms.

Part of the treated effluent would be recycled and used for the process.

Part of treated effluent is sent for forced evaporation for final treatment. The residue

collected from forced evaporation and solid waste would be stored in HDPE drums and

disposed to TSDF facility.

e) GREEN BELT DEVELOPMENT:

S L PHARMACEUTICALS

Green belt with selected perennial plant species developed in all around the site. This is

to be considered as an essential requirement against pollution though it may add to the

initial costs of the project. The green belt is considered essential because of the

following:

Plants act as pollutant sinks

Green belt helps in noise attenuation

Green belt balances ambient oxygen and carbon dioxide levels

Green belt leads to a significant drop in air temperature near the manufacturing

shed.

TECHINCAL KNOW-HOW

The process of manufacturing Bulk drug Intermediates is semi-automatic with proven

technology. The process requires supervision of experienced in-charge to control yield

and quality. No specialized know-how is required for the process. The input mix is

standardized and the output is standardized in weight.

To supervise day to day production process, the company will appoint technically

qualified and experienced persons having relevant experience in the line of

manufacturing of Bulk drug intermediates.

The Unit will have well experienced, skilled and dedicated work force.

Selling and Marketing Arrangement:

S L PHARMACEUTICALS

The Company, by virtue of its well experienced directors in the field of Bulk drugs and

pharmaceuticals, has well established market connections. The company directors have

good relations with top executives of many reputed pharma companies and traders by

virtue of which fresh orders can be organized at any given time. Many recognized

companies assured their orders to the company and many more orders are expected

based on the completion of facility and regular production.

Our products and their intermediates are used in many organizations, and it is proposed

to enter into long term contract with these organizations. To name a few

S.No. 1 2 3 4 5 6 7 8 9

10 11 12 13 14

Name of the Company/trader Hetro Drugs – Hyderabad Lee Pharma Ltd-Hyd Vijaya sri organics –Hyd Sharon bio-medicine Ltd Cipla Ltd-Mumbai Carnivallis ltd-Hyd Dr.Reddy s Ltd-Hyd Zydus cadila-Mumbai Lifeline industries-Mumbai Micro labs-Bangalore Auctus Pharma Limited Hinkle Pharma Cipla Astra Zeneca

Also, the Company proposes to have its own market network by appointing experienced marketing staff and dealers to sell the products.

The company also approached many prospective buyers who have assured to give their requirement on conversion basis (Buy back arrangements) so that the company can have both self products and conversion market also. This will enable the company to have better control in plant operation, better market and financial flexibility.

SWOT Analysis

S L PHARMACEUTICALS

Strengths:

The Promoters are technically qualified, well experienced and financially sound besides possessing the required managerial competence and business skills to make proposed project and successful and profitable venture.

Procurement of raw material is very easy, since Hyderabad and Bangalore being major pharma production center in India.

The Project is located near Hyderabad and Mumbai the Pharma hub of India.

Well Developed Industry with Strong Manufacturing Base and present industry conditions are favorable.

Access to pool highly trained scientists.

Competencies in technology and process development Cost competitiveness in Global Market.

Opportunities:

Significant Export potential

Licensing deals with MNCs

Marketing alliances to sell MNC products in domestic

market Contract manufacturing arrangements with MNCs

Supply of generic drugs to developed markets

Threats:

Product patient regime poses serious challenge to domestic industry unless it invests in research and development.

R&D efforts of Indian pharmaceutical companies hampered by lack of enabling regulatory requirement. For instance, restrictions of animal testing outdated patent office.

S L PHARMACEUTICALS

Drug Price Control Order puts unrealistic ceilings on product prices and profitability and prevents pharmaceutical companies from generating investible surplus.

Lowering of tariff protection

The new MRP based excise duty regime threatens the existence of many small scale pharma units, especially in the states of Andhra Pradesh and Maharashtra that were involved in contract manufacturing for the larger, established players. These companies are now shifting their manufacturing from these states to states like Himachal Pradesh, Uttaranchal that enjoy tax holidays.

Risk Factors and mitigation

1. The company is promoted by first generation entrepreneurs

Though the Company is promoted by first generation entrepreneurs, the Promoters are technically qualified, well experienced and financially sound besides possessing the required managerial competence and business skills to make proposed project a successful and profitable venture. Further the Company has identified and proposes to appoint professionals in key areas of Production, Research & Development, marketing, logistics and Finance.

2. The Company operates in a globally competitive business environment. Growing competition may force the company to reduce the prices of its products and services, which may reduce its revenues and margins and/or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of

operations.

The company aims to keep abreast with the dynamic business scenario and will broad-based its product mix. The Company, continuous R&D activities, will develop better process technology, improved process yield, sourcing of raw material at competitive price and development of new products/processes.

3. The prices of Raw Material/solvent consumed by the Company are susceptible to volatility. A majority of these raw materials are basic chemical, the demand for which is not dependent on demand by pharmaceutical industry. The other

S L PHARMACEUTICALS

industries, which are generally much bigger consumer of such chemicals, tend to determine

market prices of such basic chemicals; such volatility may affect company s profitability.

The raw materials consumed are general chemicals and are available in India as well as in many countries around the world at competitive prices. The company does not see any problem in procuring the raw material/solvent at competitive prices.

4. Expansions: Enhancement in production capacity by primary/main producers in our country may drive the industry into excess production.

All the major producers are having plans to go for expansion in the production facilities. The other primary producers are having high fixed overheads and their market is through dealers. But the Company is having established market connections