The JV would commence operations with an equity of $1 million and would utilise the existing facilities of Elder Pharma for production, EHC chairman and managing director Jagdish Saxena said.

The company had deferred its earlier decision of divesting stake in favour of the Singapore-based company and has opted for the JV. A formal approval for the JV from the government has been received. The JV would also help by way of a few more product variants at a later stage which will also generate exports, he added.

Tiger Balm, which was licenced to EHC for the last three years by Haw Par Health Care, contributed around Rs 8 crore to its turnover. It is estimated that the JV would be able to reach a turnover of Rs 25 crore on account of thrust and an improved marketing effort. The venture would also help improve the margins considerably, Mr Saxena said.

The company is also likely to ink a pact with Swiss company for a special skin care product. The product would be licenced by the Swiss company to Elder Healthcare which will manufacture and market it in India.

Meanwhile, Elder Pharmaceuticals, its other group company, too is setting up a JV with the US-based dermatology major, Stiefel Laboratories. The venture, in which Stiefel would 74 per cent stake while the rest would be held by Elder Pharma, will commence operations this month with around 20 products.

Elder Pharma is also in the process of enhancing its capacity to 100 mt from the existing 40 mt for bulk drugs. Around six bulks drugs are likely to be produced here which includes Roxithromycin, Flavoxat, Cararboceistine among others at a cost of around Rs 15 crore.

These bulk drugs, which are for captive consumption would contribute an additional Rs 40 crore to the turnover, once fully commissioned in March 2001. The enhancement in capacity would help the bottomline improve by around 10 per cent, Mr Saxena said.