Although Patel refused to divulge any details about the companies, of the two companies shortlisted, one of them is a relatively big company with with an established manufacturing set up. The other company is more of a marketing company and would help expand Cadila expand its operations overseas.

Apart from this, the company is also scouting for companies for acquiring medicinal OTC brands and other niche products in the domestic market. Adding of OTC products would give a big push to the company's presence on the OTC products, which stood at around 3.3 per cent of the turnover in 1998-99. The funds to be set aside for acquisitions will be from the proceeds to be received from the company's proposed public issue. Apart from acquisitions, Cadila Healthcare would utilise the issue proceeds for part-financing its ongoing projects.

The projects include the Rs 100-crore new plant at Maraiya, the new dedicated bulk drug plant at Ankleshwar and the state-of-the-art research & development centre. There is no gestation period involved as the projects have already been commissioned. The formulations complex once fully operational would consist of formulations unit, rabbies vaccine unit, bacterial vaccine unit, antibiotics unit and trans-dermal formulations. Anti-rabbies and hepatitis B vaccines plans are expected to yield an additional turnover of close to Rs 50 crore and Rs 40 crore respectively.

The company has also set up a new dedicated plant at its existing site at Ankleshwar to manufacture the bulk drug Losartan.

Apart from this, the company is also setting up a state-of-the-art research & development centre with an estimated cost of Rs 50 crore and is expected to be operational by March 2000.

During 1998-99, formulations with a sales mix of close to 73 per cent formed a major portion of Cadila's turnover, followed by bulk drugs (9 per cent) and generics (9 per cent).

Although no limit has been fixed and no premium has been fixed for the issue price or the book building, the company is expected to raise close to Rs 550-600 crore from the proposed public issue. Ninety per cent of the issue will be through the book building route and the balance in the fixed price form. Cadila will be issuing 1.48 crore fresh equity shares through the book building route. The issue will be jointly managed by JM Morgan Stanley, Kotak Mahindra Capital Co and DSP Merrill Lynch. Cadila's turnover for 1998-99 stood at Rs 361 crore and is expected to close the current year with a turnover of Rs 475 crore.