J&J hives off adhesives unit to Premchand group

Johnson & Johnson Ltd, the 75 per cent subsidiary of US healthcare major J&J Inc, has sold its Permacel adhesives unit in Mumbai to the Premchand group. The Premchand group holds 25 per cent in the Indian subsidiary.

The principal reason for the adhesives business being divested is that it no longer fits in with J&J India's long term strategic and business focus, says R R Mallar, vice-president, J&J India.

While the consideration for the deal is undisclosed, the Permacel business is estimated at Rs 50 crore, which is a tenth of J&J's turnover of approximately Rs 500 crore. The plant is installed in an area of about 50,000 square feet and is involved in manufacture of industrial and speciality products such as pressure sensitive adhesive tapes and labels, identification products, and insulation tapes.

According to Mr Mallar, there is no proposal from J&J Inc to increase its stake in the Indian subsidiary, which means that the Premchand group is not buying the unit in exchange of its equity in J&J India.

Meanwhile, the Premchand group may enter into a tie-up with an international company to provide more focussed attention to the adhesives business. The group has agreed to retain the entire workforce of 200 at the Permacel unit.

The global adhesives business of J&J Inc was divested a couple of decades ago. The Indian subsidiary continued operations as it was seen as a profitable operation.