Missouri-based $ 7.5 billion Monsanto has acquired 16 per cent of the Mumbai-based, Mahyco at a cost of Rs 112 crore from the Barwales, the promoters of the closely-held company. The US firm will acquire further 10 per cent stake for Rs 70 crore through a fresh equity issue. The Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India (RBI) have already approved the acquisition.

Mahyco is currently 100 per cent owned by the Barwale group. After the 26 per cent sell-out, the Indian group will still control 74 per cent stake and plans to utilise the funds to increase its R&D facilities. When contacted, the Barwales did not comment on the sell out.

The acquisition by Monsanto makes sense as Mahyco is the leading player in theseed/crop species segment with 16 production centres, a network of 23 sales offices and over 2,500 dealers. The product portfolio of Mahyco comprises over 30 crop species including cereal, pulse, oilseed, fibre, fruit and vegetable crops. On top of this, it markets over 300 hybrids.

Thus, the multinational need not set up its own network and gets a ready team to promote its products into the country. The mega entry of Monsanto into the Indian market comes after the bid by Cargill Seeds to expand here in a big way.

Monsanto has been operating in India since 1949 and is a market leader in agricultural and industrial chemicals market. Incidentally, Monsanto and Mahyco already have a 50:50 joint venture, Mahyco Monsanto Biotech.

As India is a big market, the US firm has already made moves to expand here through its Indian subsidiary, Monsanto India. The company is planning to claim patent right over 30 varities of vegetables -- herb resistant potatoes, tomatoes, rice, special corn, special trees andbio-pesticides. It has also filed an application with the US authorities claiming patent rights over Bt cotton, a pest resistant cotton seed.

The acquisition of a strategic stake in Mahyco is in line Monsato plans to invest more in the Indian market. The company seeks to expand its turnover to Rs 500 crore over the next five-year period. As per its global strategy, Monsato is spinning off its chemical business into a new $ 3 billion subsidiary, Solutia. In India too, Monsato plans to spin off its chemical business into a subsidiary in which the parent firm will hold 40 per cent stake.

The Monsanto group currently operates through three companies in India, Monsanto India, Monsanto Enterprises and Monsato Chemicals. Analysts say that the multinational's entry into the Indian company might ultimately result in the Barwales selling out their entire stake to the multinational in the years to come.