this story originally appeared in on sep 17 2012 new delhi japans diversified trading company mitsui co is buying an additional 25 stake in active pharmaceutical ingredient maker arch pharmalabs for rs 372 crore a move that will raise its shareholding in the mumbaibased privatelyheld company to 30 mitsui is buying out the stakes of ilfs trust co idbi trusteeship services and rainbow fund according to an application to the fipb the deal will increase the stake of foreign investors in the indian company to 46 arch said the stake sale is to pave way for the exit of the three private financial investors which have invested in the company since 200304 though an initial public offer could have been an option we thought market conditions wouldnt permit that said ajit kamath chairman and md of arch pharmalabs the pharmaceutical ingredient manufacturer opted for stake sale to mitsui because the japanese company was neither a non financial nor non pharma investor and avoided a possible conflict of interest with its existing customers said kamath arch pharmalabs mainly makes active pharmaceutical ingredients and intermediates the main chemical used in making medicines it also provides contract research and manufacturing services crams to other drug makers for a fee mitsui is one of the worlds most diversified conglomerates with interests across trading investment and service enterprise it is also engaged in product sales logistics and financing mitsui also has a significant stake in an api company in japan and a formulations facility in china kamath said mitsui would represent arch pharmalabs exclusively in japan for both its generic and crams business the deal was among the eight pending foreign direct investment applications cleared by the union cabinet last week with the rider that they have to adhere to the new guidelines it had not disclosed details of the transaction as per the new conditions for foreign investors buying into indian drug companies mitsui must maintain the production level of essential drugs for five years at the highest annual production level of these drugs in any of the three years preceding the purchase of the indian company the buyer must also invest an equal amount in research and development the highest level in the three preceding years prior to the sale of the local firm in february arch pharmalabs had sought the fipbs nod to sell 2 stake held by indian investors to cyprusbased indus kamdhenu fund but withdrew it before the matter was examined by the approving authority in may it filed a revised application to divest its stake to mitsui