Mumbai: At least seven foreign private equity (PE) companies and US-based medical diagnostics firm Quest Diagnostics Inc. have initiated talks separately to either buy a significant stake in Mumbai-based Thyrocare Technologies Ltd or acquire it in full, according to people familiar with the development.

High valuation: (above) The Thyrocare laboratory in Navi Mumbai; and its promoter and CEO A. Velumani.

The sale talks come after Thyrocare mandated Deloitte Touche Tohmatsu India Pvt. Ltd, the local arm of US-based audit and consultancy firm Deloitte Llp, to scout for potential buyers, these people said.

The?seven?potential?PE?investors include Avendus Private Equity Investment Advisors Ltd. and Citigroup Venture Capital International (CVCI), according to these people.

Manoj Thakur, chief executive officer of Avendus PE, said the firm hasn’t looked at Thyrocare; and a Citigroup official said the firm didn’t want to comment on “market rumours". Quest couldn’t be contacted on the phone. An email sent to its New York office on Saturday remained unanswered at the time of going to press.

Thyrocare promoter and chief executive A. Velumani confirmed that some foreign PE firms and a few diagnostics companies had shown interest in the firm. “It could be a deal for divestment of a majority stake, or a complete exit for me," he said, but declined to share details of the talks.

Velumani said an exit from Thyrocare would help him pursue other business interests.

Thyrocare’s management, according to the banker, has valued the company at Rs600 crore, around 10 times the revenue it earned in the year ended 31 March 2009.

An executive from a Thyrocare rival said, on condition of anonymity, that the firm’s business model didn’t make a strategic fit for his own firm, although it was on the lookout for?acquisition opportunities in the Indian diagnostics market.

Other local diagnostics firms such as Super Religare Laboratories Ltd (formerly SRL Ranbaxy Ltd) and OncQuest Laboratories Ltd, a subsidiary of Dabur Pharmaceuticals Ltd, had looked at Thyrocare earlier, he said.

Oncquest chief executive Mohit Burman could not be contacted as he was travelling. “We had evaluated the company, but didn’t go ahead," a Religare spokesperson said.

Diagnostics services is a fast growing segment of the Indian healthcare sector. The sector, which is largely unorganized, has around 100,000 laboratories.

Among domestic service providers in the organized sector, Mumbai-based Piramal Diagnostics Services Pvt. Ltd and Super Religare are looking to consolidate their business, and are exploring growth opportunities via acquisitions.

Thyrocare, which follows a centralized laboratory (single location) testing model with a nationwide franchise network for fast-track sample collection and result delivery, earned Rs60 crore revenue in 2008-09.

Velumani, a scientist-turned entrepreneur, established Thyrocare in 1996 after resigning from Bhabha Atomic Research Centre, Mumbai. Thyrocare, which was started as a thyroid testing laboratory, now caters to critical diagnostics services related to growth metabolism, cancer, infectious diseases and infertility.