ABL Biotech, the 40 per cent joint venture partner in the Chennai-based biotech major Shantha Marine Biotechnologies, is likely to exit from the company. The four year old biotechnology company is currently a 60:40 joint venture between the Hyderabad-based biotechnology major Shantha Biotech and ABL. ABL Biotech's likely exit from the JV is learnt to be an outcome of the ongoing financial and management crisis in Shantha Marine following the resignation of its founder director K O Issac.
According to internal sources, after the ABL founder director K O Isaac resigned a month ago from the post of MD in Shantha Marine, the company has lost its major chunk of clients. Isaac's resignation came as a protest against the decision of Shantha Biotech to appoint Abhay Gupta as the new COO above him. Following the exit of Isaac, it is learnt a sizable number of employees especially from the marketing department have also put in their papers.
The sources informed that with Abhay Gupta as the newly appointed COO, the company has witnessed tremendous financial erosion due to cut down in their clientele's list. It is expected that the board of directors may think about either a change of management or discontinuing the current joint venture.
When contacted, a highly placed source with Shantha Marine Biotech said it was early to comment on the developments. "It is very early to comment on this issue as talks are on at different levels. Here, we do not have a correct picture now. A clear picture is likely to emerge only after a week's time. At this point of time, it can be considered as speculation," said the source, who did not deny the current management crisis.
The joint venture, said to be the first 100 per cent marine biotech initiative in the country, was started with an investment of Rs.1.5 crore. The company has also planned to pump in about 90 crore in five years for further development. Shantha Marine Biotech was envisaged to develop asthaxanthin (an antioxidant), gamma linolenic acid that finds direct application in treating obesity, PMS etc. The JV produces beta-carotene from an indigenous strain of the marine algae, dunaliella, the only one of its kind in India. Carotenoids act as antioxidants, protecting cells from free radical attack. These molecules have wide ranging applications in enhancing immune responses, protecting the skin and even retarding the growth of cancer cells.
The formation of Shantha Marine Biotech was quite incidental as ABL approached Shantha Biotech for financial support four years ago for the production of Beta Carotene. Shantha Marine Biotechnologies is at present a Rs. 10 crore company. Beta Carotene is a rich source of Vitamin-A and potent antioxidants, which is said to have a promising domestic and global market.
However, the industry sources opined that though Shantha Biotech is financially a strong entity, when it comes to biotechnologies it is more about a technical war than the financial power. Though the talks are on between ABL and the Shantha Biotech for a likely takeover, the final picture might come out only at the end of this month.