Hester Biosciences plans to raise fresh funds for its proposed African animal vaccine plant

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Maker of poultry and animal vaccines Hester Biosciences is contemplating raising capital through a combination of debt and equity  to set up the proposed animal vaccine manufacturing unit in Africa, cost of which could exceed Rs 100 crore.

The company said it will take a decision on African investment and fund raising in next two months.

“At the moment we are studying the African market and the capex requirements,” Rajiv Gandhi, CEO & Managing Director of Ahmedabad-based company told Moneycontrol.

Gandhi said the proposed manufacturing plant, likely to come up in Tanzania, will manufacture vaccines against African specific bacterial and virus strains causing disease in cattle, goat and sheep.

Hester Biosciences hopes that having a manufacturing plant in Africa with specific vaccines to meet the demand there will help the company compete for African tender business and private markets more aggressively.

“We will develop the vaccines, we have ability to manufacture those vaccines,” Gandhi said adding that the vaccines proposed to be developed in Africa doesn’t have much competition at the moment.

If the African plant materializes, it will be the second overseas plant of Hester Biosciences. The company already has a a plant in Nepal in addition to its flagship facility near Ahmedabad, Gujarat.

Hester Biosciences stock more than doubled shareh6olders' value in 2017.  The shares of Hester Biosciences declined 0.05 percent to close at Rs.1637.40 on Friday, while the benchmark Sensex gained 0.55 percent to end 33,940.30.

Hester Biosciences ended FY17 with revenues of Rs 123 crore, of which poultry vaccines alone contributed about 88 percent market share. The rest comes from large animal vaccines and animal health products. Going forward, the company expects its animal vaccines and health business to grow much faster in next three years contributing almost half to the company's revenues.

“We will retain our sales and net profit growth margins FY18, but the growth in coming year is expected to be much higher based on the rollout of procurement tenders from various state government and Food and Agriculture Organization (FAO), the UN body that leads international efforts to defeat hunger,” Gandhi said.

Hester Biosciences sales and net profit grew at 22 and 29 percent respectively in FY17.

The company is also developing a first of its kind recombinant poultry vaccines that can lower costs and boost production. Currently, poultry vaccines are produced based on tissue and cell culture.

The experimental batches will be ready in six to eight months, Gandhi said.

The market for poultry vaccines is around Rs 350 crore and animal vaccines that Hester Lifesciences targets, including  Brucella and PPR vaccines, have market size of around Rs 100 crore. The market is  growing at 30-40 percent as government and FAO educate farmers on vaccination against Brucella and PPR diseases.