Addressing shareholders at the annual general meeting, E Merck chairman, S N Talwar said that the imposition of the special additional eight per cent import duty, coupled with the depreciation of the rupee by over 10 per cent, will increase the cost of imported inputs.

Moreover, the restriction on the availment of modvat benefit to 95 per cent of the duty on inputs will increase the cost of materials consumed while the increase in customs and excise duties as well as as an increase in the prices of the petrol and postal tariff will result in the escalation of operating costs, Talwar said.

E Merck managing director, HG Brotz, said that the capex outlay for the year was Rs 14 crore and this would be financed throughinternal accruals. He also said that the company would continue to rationalise its workforce through a voluntary retirement scheme (VRS) and the company had spent approximately Rs 2.16 crore on this front.

On the multinational's 100 per cent research and development arm, Merck Development Centre India (Pvt) Ltd, Brotz said that it would be operational in the third quarter of this year.

During the past year, the company had added weather-resistant pearl lustre pigments for automotive paints, hematology cell counters for diagnosis, products for hygiene monitoring and chromatography instruments for high value pharmaceutical production to its chemicals division's portfolio.

In the pharma unit, new products included polyzee and beta-sclerobion capsules. New products slated for launch include a modern antibiotic and a cardiovascular product.

Meanwhile, the company's soft gelatine capsules project at Goa was commissioned in February 1998. The turnover from the Goa facility is expected to scale Rs 100 croreby 2000 even as the new unit will reduce E Merck's dependence on outside manufacturers.