Bangalore: Avestha Gengraine Technologies Pvt. Ltd. (Avesthagen) plans to acquire two domestic seed companies to deploy the technology it has developed in the agri-biotechnology business.

Bangalore-based Avesthagen is currently in talks with five Indian seed companies for possible acquisitions. "We will buy one good field crop seed company that specialises in rice, maize, cotton, jowar, etc., and one vegetable seed company. Avesthagen has six technologies sitting on the shelf which will be plugged in by acquiring the seed companies," Villoo Morwala-Patell, founder and chief executive officer of Avesthagen told The Hindu here.

Each seed company will be separately managed under the holding company Atash Seeds Pvt. Ltd., a 50-50 joint venture recently floated by Avesthagen and the world's fourth largest seeds group, Limagrain. Ms. Patell said both Avesthagen and Limagrain were strong on technologies and in operating the seeds business, but needed seed companies in India to make use of the technologies.

Raising funds

Avesthagen is in the process of raising Rs. 180 crore (between 20 to 25 million euros or $25 million) as equity investment from private equity firms, investment banks or strategic global investors to fund its capital expansion plans, including setting up manufacturing facilities for its products. It is also looking at the option of raising debt or hedge funds from global investment banks as a pre-initial public offer (IPO) funding, which could be later converted into equity.

"The negotiations are going on. A final decision will depend on the valuation. We are looking at where we can get the best value and derive maximum long-term benefit for the company," she said.

After the current round of funding, Avesthagen is looking at a time-frame of 18 months to get its act together and launch the IPO some time in the second half of 2008 depending upon market conditions.

With the company on the growth path, Ms. Patell said Avesthagen has to start manufacturing its products by setting up production facilities this year before moving into the next stage of research and development. "The company needs large investments, and an IPO is one of the options to raise the big funds," she said.

Of the 11 bio-similar drugs in the pipeline, four would be ready for release by 2008 and thereafter two every year. A tuberculosis diagnostic chip would also be ready for release by September/October 2007, she said.

The preparatory work for a stock-exchange listing has already started with the Board of Avestha Gengraine Technologies Pvt. Ltd. clearing a proposal on Friday to re-name the company as Avesthagen Pvt. Ltd. and to re-designate Ms. Patell as founder, CEO and managing director of the company, from October 1. The academic start-up founded by Ms. Patell, a Ph.D. from Louis Pasteur University in Strasbourg, France, earned revenues of Rs. 21 crore (3.7 million euros) in 2005-06 and has been a profitable entity for the past two years.

The company has four strategic business units: biopharmaceuticals, nutraceuticals, agri-biotechnology and science innovation (diagnostics).

Each of them will now be run as a separate cost and profit centre headed by a CEO and a chief scientific officer.

The company's partners include multiple top ten global companies in each of its fields of research such as Nestle, AstraZeneca, Novartis, Cipla and bioMerieux.

Backward integration

Ms. Patell said Avesthagen was looking at backward integration by tapping the rural market in a big way through its alliances with global players.

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