Business Line
Wednesday, July 13, 2005

Sami Labs plans IPO by 2006-end

The Bangalore-based Sami Labs Ltd is looking at an initial public offering (IPO) by the end of 2006.

Announcing this at a press conference here on Monday, Dr Muhammed Majeed, Chairman, said that though the IPO is likely to be in end 2006, this has not been finalized. However, he emphasized that the company would go in for an IPO very soon.

Meanwhile, the company is looking at making acquisitions, particularly in Europe and South America, Dr Majeed said. It has commissioned Ernst and Young to identify possible targets for acquisition. The acquisitions, which are expected to involve an investment of Rs 100 crore, will be funded through internal accruals, he added.

Based on its performance in the January-June period of this year, during which it recorded a turnover of Rs 326 crore, the company is looking at a turnover of over Rs 600 crore for 2005, said Dr Majeed. Markets such as Japan and Australia account for much of this growth, he explained.

Encouraged by its performance over the past year, the company is also in the process of expanding its manufacturing capacity. While two new plants in Karnataka will start production by the end of the year, another new plant near Hyderabad is scheduled to start operations by August, he said. Also on the cards is a new plant at Salem in Tamil Nadu, he added.

The company is also in the process of launching its Johara range of cosmetics and nutritional supplements. The Johara range, originally scheduled to be launched in April this year, will now be introduced in October, said Dr Majeed. The company has chosen to sell these products through the multi-level marketing route, he added.

Sami Labs is also looking at building partnerships with farmers’ collectives, particularly in Kerala, to boost contract farming of herbs. The company has already initiated contract farming of herbs such as coleus forskohlii (ban tulsi), red clover and turmeric on over 17,000 acres of land spread across eight States, Dr Majeed explained. The objective is to have at least 40,000 acres under cultivation by the end of the year, he added.

Under the contract farming model developed by Sami Labs, the company enters into buy-back arrangements with farmers and also provides them with planting material. It also helps farmers obtain agricultural loans and crop insurance, he added.