Dr Lal Path Labs eyes acquisitions in Gujarat

Dr Lal Path Labs Private Limited (LPL), the country's oldest clinical pathology and diagnostic services company, is eyeing acquisition of standalone players in the Gujarat's pathology laboratory market for its expansion in the western part of the country.

Arvind Lal, chairman and managing director of Dr Lal Path Labs, said, "We are in talks with two pathology laboratories in Gujarat for acquisition, which would be finalised by April 2007."

These are medium and large size players involved in pathology business in Gujarat, he added.

Commenting on the possible acquisition, Lal said, "Our first preference will be to takeover existing labs."

As per the company, taking over the existing labs having infrastructure quality standard on par with Dr Lal Path Labs is a profitable proposition.

In case the company does not get through the acquisition, the second choice would be to set up a greenfield project for its pathology labs.

The company plans to set up three pathology laboratories in Gujarat with one each in Ahmedabad, Vadodara and Surat. It plans to further initiate talks with two more pathology laboratories in Gujarat. "The talks with two other pathology labs are expected to begin by the end of February," said Lal.

The company plans to operate in three business model for its Gujarat operation "" pitch for direct business; develop business through outsourcing and enter into partnership with the existing pathology labs in Gujarat.

The company expects approximately 1,000 patients a day at all the three centres in the state.

Currently, Dr Lal Path has around 20 pathological labs spread across the country and would spend around Rs 60 crore to take the number to 50 by 2009-end.

The company would fund its expansion partly through internal accruals and partly through stake sale to Sequoia Capital, which currently holds 26 per cent in Dr Lal's.

The company claims that it is growing at a rate of around 40 per cent per annum, and is expected to clock revenues to the tune of Rs 75 crore in the current fiscal.

It sees its revenues touching Rs 200 crore by 2009-10.