Lal Path Labs plans IPO to fund expansion

Dr Lal Path Labs (LPL), a leading diagnostics and pathology services provider in the country, plans to enter the capital markets to fund future expansions.

Lal Path has 25 pathological laboratories in the country and plans to double the number within two years.

The company is also on the look out for acquiring suitable pathology labs in the country. Plans are to achieve a turnover target of Rs 200 crore in three years from the current Rs 75 crore, O P Manchanda, chief operating officer, said.

"We are looking at the option of IPO route to fund our expansion plans for the future, as venture capitalists exit over a period of time. The timing of the IPO will be decided considering the projects and growth targets", he said.

In June 2005, West Bridge Capital Partners, a Mauritius-based US-India focused venture capital fund, had picked up 26 per cent stake in Dr Lal Path Labs for $ 6.5 million (Rs 28 crore).

The Delhi-based company is planning to expand in south and western parts of the country.

In a week's time, LPL will open two new laboratories at Kolkata and one each at Nagpur, Pune and Bhopal. An exclusive clinical trial laboratory will also come up at Goregaon. So far all the 25 labs, including the five to be commissioned soon, are greenfield projects with an investment of Rs 1-1.5 crore each.

LPL plans to spread its operations internationally by outsourcing pathology and diagnostic services. The company is currently in advanced negotiations with marketing partners in the US and Europe for outsourcing diagnostic services. Business will begin in two-three months.

The diagnostics and pathology services market in the country is valued at Rs 5,000 crore with over 40,000 players.

SRL Ranbaxy, Metropolis, LPL, Pathnet India, Wellspring, Thyrocare etc are the major pathological lab service providers in the country, with about 10 per cent market share. LPL eyes about 10 per cent of the market within a few years, said Manchanda.