Chennai, Mar 14 (IANS): Conglomerate and acquisitive Murugappa group is entering the pharmaceutical business through its listed Tube Investments of India Ltd at an outlay up to Rs 285 crore.

According to Tube Investments, the company has signed an agreement with N.Govindarajan, an experienced industry professional to float a subsidiary.

As per the agreement, Tube Investments will invest up to Rs 285 crore in the proposed contract development and manufacturing operations (CDMO) and active pharmaceutical ingredients (API) subsidiary in the form of equity and compulsorily convertible preference shares.

On his part, Govindarajan invested up to Rs 15 crore as equity and compulsorily convertible preference shares.

Subject to the performance and other terms and conditions specified in the agreement, Govindarajan will be entitled to get up to 25 per cent of the equity for his investment.

According to Tube Investments, it was looking at new platforms to complement the existing businesses for its future growth as part of its long-term strategy and has identified CDMO as a new line of business with the potential to grow and expand in the future.

M.A.M Arunachalam (also known as Arun Murugappan), Executive Chairman of Tube Investments said, the foray into CDMO, a business with high growth potential, augurs well with its plan to diversify its business portfolio and reduce dependency on traditional revenue streams.

Govindarajan will be the Chief Executive Officer of the subsidiary and will be establishing the business and driving its growth and profitability.