Ex-staff plan to take over 6 Kerala PSUs

D Aravindakshan was the managing director of Kerala State Drugs and Pharmaceuticals at Alleppey for many years before taking over as the head of Agastya Biopharma, a company promoted by 125 former employees of the ailing public sector drug firm.

Aravindakshan is now planning a homecoming of sorts. He and his 300 colleagues have proposed to take over KSDP and five other closed public sector companies in Kerala. All the 300 people are ex-employees of these PSU companies.

The mission is to set up one of the largest bio-pharma companies in India under the public-private partnership model at an investment of over Rs 600 crore (Rs 6 billion).

Agastya Biopharma, which was set up two years ago, has formally requested the state industries department to hand over the defunct KSDP, Kerala State Salicylates and Chemicals at Thiruvananthapuram, Travancore Plywood Industries at Punalur, Kerala State Detergents and Chemicals at Malappuram, Chipcos sugar distillery at Palakkad and Kerala State Soaps and Oils at Kozhikode.

"Our project is envisaged as a public-private joint venture and the assets of these companies will be in the form of the state government's equity in the project. The state has to decide its equity in the venture. We are ready to pay the balance, depending on the state's equity and valuation of the assets of these companies," said D Aravindakshan.

KSDP was the only manufacturing unit in the world to produce vitamin A from lemon grass oil and was in the business of manufacturing drugs for government hospital supplies before it shut down due to the lack of business orders and funds.

Sources in the Kerala industries department said discussions were initiated by Industries Minister Ilamaram Karim in December last year. A final decision will take some time as the government is exploring several options.

Meanwhile, Agastya Biopharma, which is planning to manufacture about 250 drugs, including 40 biotech drugs, is in the process of setting up two greenfield units at Palakkad and at Mavelikkara in Alapuzha at an investment of about Rs 600 crore.

Aravindakshan said the 300 shareholders of Agastya Biopharma had invested about Rs 27.25 crore (Rs 272 million), mainly from their voluntary retirement benefits.

The Kerala State Industrial Development Corporation has a commitment of 20 per cent equity for Rs 20 crore (Rs 200 million) and the Plantation Corporation of Kerala and the State Farming Corporation have committed Rs 10 crore (Rs 100 million) each for cultivating medicinal plants on 34,000 acres of land, with a buy-back arrangement.

Agastya has tied up with SBI Capital for funds worth Rs 200 crore (Rs 2 billion) for its first manufacturing plant. Talks are in advanced stages with the Industrial Development of Bank of India and ICICI Venture to mobilise about Rs 100 crore (Rs 1 billion) as term loans and strategic investments.

Agastya Biopharma would be going in for an initial public offer by the end of this year or early next year, mainly to fund its second plant and for acquiring the sick government facilities, Aravindakshan said.