Bayer India will, in turn, mainly focus on manufacturing activities at its state-of-the-art facility at Thane, near Mumbai.

The restructuring exercise, which is aimed at, "assuring a non-loss situation" for its shareholders, will see Bayer India discontinue all future investments in pharmaceutical sales and marketing. Bayer's pharmaceutical business, currently ranked 60 in India (market share of 0.5 per cent), has not been able to achieve the critical mass required to make it a self sustaining profitable activity.

Bayer India managing director, Alan McGilvray, said the reorganisation would also help secure the group's Thane facility as a potential flagship site for the German multinational's south-east Asian operations.

The German parent is expected to make significantinvestments to upgrade manufacturing standards further.

Though the revamp will not result in any asset transfer to the new entity, Bayer India shareholders will be duly compensated. The company will shortly appoint an external valuation agency for this purpose. The domestic pharmaceutical business accounts for approximately Rs 40-45 crore of Bayer India's turnover. Under the new arrangement, the proposed joint venture entity will market all 13 Bayer brands including anti-malarial Resochin, anti-fungal Canesten and Baycort, while production will be handled by Bayer India. Bayer AG, Germany which owns the trademarks for all these brands, has already issued a notice discontinuing its licensing arrangement with Bayer India, effective July 1, 1998.

Bayer India manufactures almost 80 per cent of its formulations at Thane, while the balance is outsourced. The future thrust of this unit will be towards manufacturing high-value formulations, besides crop protection products, rubber chemicals etc.

Bayer India'spharmaceutical head R Raghu Kumar said the new company would take on Bayer India's existing 220-and-odd pharma marketing personnel while those at the Thane facility would continue to be on Bayer India's rolls. Of the 900 employees at Thane, roughly 140 are engaged in pharmaceutical production. Raghu Kumar is also likely to head the new company.

First-quarter sales up 40 per cent

The Bayer group in India has registered a 40 per cent jump in sales for the first quarter of the current year at Rs 280 crore, compared with the corresponding period of the previous year.

This is in line with the group's plans to close the year with sales of about Rs 1,100 crore. The group hopes to scale a turnover of Rs 2,000 crore by 2001.

Even while unveiling plans to revamp its pharmaceutical business, Bayer India managing director Alan McGilvary said that options could be considered to examine a similar kind of arrangement in the consumer care business. There are, however, no defenite plans in this area currently,he said.

The consumer care business, renowned for its Baygon range of insect control products and Autan mosquito repellant lotion has a sales force of about 50 and is one area where the group is keen on quantum growth.