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Thursday, Mar 14, 2002

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Mauritius company to buy Hind Lever seed business

Ambarish Mukherjee

NEW DELHI, March 13

MAURITIUS-BASED India Seed Holdings Ltd (ISHL) is all set to buy out Hindustan Lever Ltd's (HLL) seeds business in India for an estimated Rs 43.20 crore.

In order to hive off/get out of seeds businesses in India, HLL recently incorporated a subsidiary company christened PEGS Ltd (PEGSL).

HLL will be transferring its seeds business to PEGSL shortly, following which ISHL will acquire 100 per cent stake in the company having an issued and paid-up capital of Rs 43.20 crore. This would be in two phases, informed sources said.

ISHL recently got conditional permission from the Government to acquire HLL's seed business in India.

Post-acquisition, ISHL will carry on the business of developing, producing, processing and marketing hybrid seeds in India. The company also intends to make downstream investments through PEGSL by acquiring other attractive seeds businesses in India and abroad and by entering into strategic or joint venture alliances, according to sources familiar with the developments.

Bar on terminator tech

To ensure that India farmers using hybrid seeds developed by foreign companies for the first time are not taken for a ride, the Government has imposed a strict condition regarding the technologies and functioning of ISHL in India.

The conditions imposed by the Government on ISHL include an irrevocable embargo on the company against bringing terminator technology in India for which the company will have to give a mandatory undertaking to the Department of Biotechnology.

The approval is also subjected to the condition that International Bio-safety Committee and RCGM shall monitor the activities pursued by the company post- acquisition.

In the first phase of the acquisition, ISHL or any of its group companies or affiliates will acquire up to 74 per cent of the issued and paid-up share capital of PEGSL, by infusing funds and subscribing to a fresh issue of equity shares by PEGSL.

The balance 26 per cent stake will be retained by HLL for the time being, according to informed sources.

ISHL is currently represented in India by the Hyderabad-based Mahendra Hybrid Seeds Company Ltd.

In the second stage, as and when HLL decides to completely exit from PEGSL, HLL's 26 per cent stake in the company could either be bought by PEGSL directly or by way of transferring HLL's holding to ISHL or its group companies or affiliates, sources said.

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