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Ambarish Mukherjee

According to the plans, the joint venture company will have a paid-up capital of Rs 50 crore and will issue shares to the Cuban company.

NEW DELHI, Jan. 1

THE Bangalore-based Biocon India's plan to set up a joint venture company with Cuba-based Centre for Molecular Immunology (CMI) to manufacture and market a select range of biotechnology products for human healthcare has hit a roadblock.

The proposed joint venture — Biocon Biopharmaceuticals Pvt Ltd — is to have Biocon India as the majority partner with 51 per cent stake and CIMAB, the commercial arm of CMI, a 49 per cent stake.

According to the plans, the joint venture company will have a paid-up capital of Rs 50 crore and will issue shares to the Cuban company against the value of the technology transferred to the joint venture.

However, allotment of shares against the value of technology transferred or for considerations other than cash is not permissible according to the existing policy framework for foreign investments. As a result, the Foreign Investment Promotion Board, whose approval is required to go ahead, has refused to grant permission to the company.

Biocon India is the largest biotechnology company in the country, which had announced plans to go public in the first half of 2003. The company has registered a turnover of around Rs 180 crore in financial year 2001-02 and the projected turnover for fiscal 2002-03 is Rs 280 crore.

The company also has around 35 patents to its credit and is considered as the powerhouse for realisation of the country's biotechnological business potential.

The company had also announced that it would go for international listing after domestic listing in 2003.

Our Bangalore Bureau reports:

The Biocon India Chairman and Managing Director, Ms Kiran Mazumdar Shaw, said the FIPB move was a more "in the nature of seeking a clarification rather than a rejection."

She expected the matter to be sorted out soon, she told Business Line. "The project is on and there is no problem. It was a technical query on a highly technical issue as the share allocation is on the basis of technology transfer (from the Cuban partner) and there is no money coming in."

According to Ms Mazumdar Shaw, Biocon will be getting a new molecule for the proposed oncology product based on the monoclonal antibody (MAB) technology - something that is not available in India. The technology is very important for India and is being strongly backed by the Department of Biotechnology, she said.

Pending clearance of the proposal, "We expect to start the project very soon and hit the market by 2004-end or early 2005," Ms Shaw said. The drug would have a huge export potential. Though the company has given itself 24 months from approval, it may commission it 6-8 months earlier than that.

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