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Last Updated : Sep 11, 2014 06:49 PM IST | Source: CNBC-TV18

Sequent Scientific arm Alvira buys 60% in Turkey's Provet

In an interview to CNBC-TV18, Manish Gupta, CEO, Sequent Scientifics, said that it has been a strategic acquisition, which fast-tracks the company foray into the global arena.


Sequent Scientific is in the news after its arm Alvira Animal Health has announced the acquisition of 60 percent stake in Turkey’s Provet Veterinary Products.


In an interview to CNBC-TV18, Manish Gupta, CEO, Sequent Scientific, said that it has been a strategic acquisition, which fast-tracks the company foray into the global arena.


Besides providing a strong presence in Turkey, the deal gives Sequent an opportunity to expand in other markets like Central and Eastern Europe and Russia, Gupta said.

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The acquisition also gives the company access to Provet’s 100-odd products, which it can leverage and expand into other territories. These include injectibles, intra-mammaries suspensions and oral solutions. And finally, it brings "manufacturing capability to the table".


Below is the verbatim transcript of Manish Gupta's interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.


Reema: Can you walk us through the rational for this acquisition and what does it bring to the table?

A: Provet for us is a very strategic acquisition. As you are aware that Alvira has set itself to be amongst the global top ten veterinary companies and towards that Provet is fundamentally fast tracks our foray into the global business in the veterinary side, fundamentally it provides us four strategic dimensions for growth (1) strong position in turkey which is a very attractive veterinary market, in fact its one of the top 16 markets in the world and as big as India though in terms of value it’s about USD 400 million market which is equivalent of India and it’s a growing market. So that’s important for us because Provet is amongst top five companies in Turkey (2) our ability to expand in certain markets like central and Eastern Europe, Russia and Middle East and North Africa (MENA) region wherein the Provet label is getting established and it finds great acceptance (3) access to 100 odd products which Provet has which we can leverage and expand into other territories and these are into domains like injectibles, intra memory suspensions, oral solutions and topical and finally, its the manufacturing capability that Provet brings to the table and there is an EU compliance plan and we hope to offer this plan for EU good manufacturing practice (GMP) approval by early part of next year and that’s when our strategy moves to the next orbit.


Sumaira: We have no financial details on this entire transaction. Could you take us through how much you will be paying for this stake that you have bought?

A: We are bound by confidentiality and cannot disclose much details but I can broadly tell you that Provet is about 25 million Turkish lira company which is about USD 12 million. It enjoys an EBITDA margin in the region of 35 percent and our valuation what we have agreed to is reasonable and fair to both sets of shareholders. 

Reema: What will this acquisition do to your consolidated revenues as well as margins in FY15 as well as in FY16?

A: Provet for us is a strategic acquisition and not a value acquisition. It is very important. It adds about 25 million Turkish lira or USD 12 million to our revenue with 35 percent EBITDA margin. It’s a company which is growing at 20-25 percent per annum on its own and we hope to accelerate that growth to a totally different orbit as we move forward. However, I do not foresee that acceleration to come in next 12 months.

Sumaira: This time in your quarterly numbers operationally thinks have improved for you but your losses widened primarily because your finance costs have gone up. Have you taken on any fresh debt, are you looking to retire any debt and the future expansion that you have mentioned into newer markets, would you be undertaking any fresh debt for this?

A: We recently closed our transaction with Songwon wherein we sold our specialty business and that has given us significant amount of liquidity. We have also raised fresh capital in Alvira through Ascent, who invested a couple of months back. Therefore, from a cash flow perspective or our balance sheet perspective more or less the entire restructuring has occurred at Sequent or at Alvira level.

First Published on Sep 11, 2014 01:31 pm
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