Business Standard

Q&A: Vinod Ramnani, MD, Opto Circuits

'The focus is on consolidation, rather than acquisitions'

Debasis Mohapatra 

Vinod Ramnani

Medical equipment company aims to become a billion-dollar company in revenue terms in the next three to four years. This would translate into a growth of close to three times its current top line.

The company is also slowly shifting some of its manufacturing units from the US to India to cut operational costs. In an interview with Debasis Mohapatra, Managing Director Vinod Ramnani speaks about the company's growth plans and its current concerns. Edited excerpts:

acquired 11 in the last 10 years. It posted growth higher than the industry average in the last decade. What is the way forward for the company?
Going ahead, our priority is to consolidate and grow. We would like to increase our growth rate in both invasive and non-invasive segments. Consolidation of management structure and manufacturing bases would remain key to our growth process. As you know, we have not only acquired companies, but were also able to seamlessly merge them with our present operations. Overall, we want to be a billion dollar (around Rs 4,500 crore) company in revenue terms in the next three to four years, a rise of around 2.8 times from the current level.

So, would the company see no acquisition in this financial year?
Look, the focus is to consolidate, rather than look out for acquisition. Opto has acquired three in the last financial year. So, we want to spend some time to bring about operational synergies and put these entities on a higher growth path. In the near term, we don't have any acquisition plans.

Your acquisition of weighed on the fourth quarter results. It is also dragging your operating margin . How would complement your bottom line in the future?


You have to appreciate the fact that Opto, which acquired in December 2010 for $64 million, was a loss-making entity at that time. In four months, we managed to get a profit after tax (PAT) margin of nine per cent from a negative seven per cent PAT margin. So, the entity is very much on the path of rapid growth. On the EBIDTA margin, Cardiac has put some pressure on the overall margin level. It would take some time to reach the 30 per cent operating margin level. On the contrary, if you look at parameters like return on asset and earnings per share, the company clocked good growth in the last financial year. Going ahead, Cardiac would complement our overall profit numbers, since there is huge demand for its products in Europe and the US.

Is your current debt level of around Rs 884 crore a matter of concern? Would you raise funds for future growth in the current financial year?
No. Our balance sheet is only leveraged by around 0.6 times,which is healthy. Most of our debt is working capital loan, with a lower interest rate. Also, if you deduct around Rs 235 crore of internal accruals, our net debt level will be even less. As far as fund raising is concerned, we don't have any current plans to raise funds.

Your revenue guidance of 22-25 per cent in 2011-12 seems to be conservative, compared to the company's past growth figures.
We don't give any guidance as such. However, we expect to clock around 22-25 per cent growth in revenue in the current financial year. I don't think the estimate is conservative because growth would be little slower on a higher base. As the revenue base is growing at more than 30 per cent for Opto, current growth projections are realistic.

Opto is planning to shift some its manufacturing bases from the US to India. How would the company benefit from the move?
Yes, we are planning to shift some of our manufacturing bases to India. The process has already begun in the company. However, I would not be able to state the cost advantage figures for the company. We will also invest around Rs 150 -200 crore in the current financial year as part of our capital expenditure plan. While we are going to set up a new facility in Mysore on 33 acres of land, we would also build a manufacturing unit in Malaysia in the near future. Our focus is to bring more operational efficiencies and cost effectiveness to the whole system.

Will the ratio of the invasive to the non-invasive segment see any change in the near future?
Both are growing fast and have a larger market to tap globally. Also, the non-invasive segment has sound potential.

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Q&A: Vinod Ramnani, MD, Opto Circuits

'The focus is on consolidation, rather than acquisitions'

Medical equipment company Opto Circuits aims to become a billion-dollar company in revenue terms in the next three to four years. This would translate into a growth of close to three times its current top line.

Medical equipment company aims to become a billion-dollar company in revenue terms in the next three to four years. This would translate into a growth of close to three times its current top line.

The company is also slowly shifting some of its manufacturing units from the US to India to cut operational costs. In an interview with Debasis Mohapatra, Managing Director Vinod Ramnani speaks about the company's growth plans and its current concerns. Edited excerpts:

acquired 11 in the last 10 years. It posted growth higher than the industry average in the last decade. What is the way forward for the company?
Going ahead, our priority is to consolidate and grow. We would like to increase our growth rate in both invasive and non-invasive segments. Consolidation of management structure and manufacturing bases would remain key to our growth process. As you know, we have not only acquired companies, but were also able to seamlessly merge them with our present operations. Overall, we want to be a billion dollar (around Rs 4,500 crore) company in revenue terms in the next three to four years, a rise of around 2.8 times from the current level.

So, would the company see no acquisition in this financial year?
Look, the focus is to consolidate, rather than look out for acquisition. Opto has acquired three in the last financial year. So, we want to spend some time to bring about operational synergies and put these entities on a higher growth path. In the near term, we don't have any acquisition plans.

Your acquisition of weighed on the fourth quarter results. It is also dragging your operating margin . How would complement your bottom line in the future?
You have to appreciate the fact that Opto, which acquired in December 2010 for $64 million, was a loss-making entity at that time. In four months, we managed to get a profit after tax (PAT) margin of nine per cent from a negative seven per cent PAT margin. So, the entity is very much on the path of rapid growth. On the EBIDTA margin, Cardiac has put some pressure on the overall margin level. It would take some time to reach the 30 per cent operating margin level. On the contrary, if you look at parameters like return on asset and earnings per share, the company clocked good growth in the last financial year. Going ahead, Cardiac would complement our overall profit numbers, since there is huge demand for its products in Europe and the US.

Is your current debt level of around Rs 884 crore a matter of concern? Would you raise funds for future growth in the current financial year?
No. Our balance sheet is only leveraged by around 0.6 times,which is healthy. Most of our debt is working capital loan, with a lower interest rate. Also, if you deduct around Rs 235 crore of internal accruals, our net debt level will be even less. As far as fund raising is concerned, we don't have any current plans to raise funds.

Your revenue guidance of 22-25 per cent in 2011-12 seems to be conservative, compared to the company's past growth figures.
We don't give any guidance as such. However, we expect to clock around 22-25 per cent growth in revenue in the current financial year. I don't think the estimate is conservative because growth would be little slower on a higher base. As the revenue base is growing at more than 30 per cent for Opto, current growth projections are realistic.

Opto is planning to shift some its manufacturing bases from the US to India. How would the company benefit from the move?
Yes, we are planning to shift some of our manufacturing bases to India. The process has already begun in the company. However, I would not be able to state the cost advantage figures for the company. We will also invest around Rs 150 -200 crore in the current financial year as part of our capital expenditure plan. While we are going to set up a new facility in Mysore on 33 acres of land, we would also build a manufacturing unit in Malaysia in the near future. Our focus is to bring more operational efficiencies and cost effectiveness to the whole system.

Will the ratio of the invasive to the non-invasive segment see any change in the near future?
Both are growing fast and have a larger market to tap globally. Also, the non-invasive segment has sound potential.

image
Business Standard
177 22

Q&A: Vinod Ramnani, MD, Opto Circuits

'The focus is on consolidation, rather than acquisitions'

Medical equipment company aims to become a billion-dollar company in revenue terms in the next three to four years. This would translate into a growth of close to three times its current top line.

The company is also slowly shifting some of its manufacturing units from the US to India to cut operational costs. In an interview with Debasis Mohapatra, Managing Director Vinod Ramnani speaks about the company's growth plans and its current concerns. Edited excerpts:

acquired 11 in the last 10 years. It posted growth higher than the industry average in the last decade. What is the way forward for the company?
Going ahead, our priority is to consolidate and grow. We would like to increase our growth rate in both invasive and non-invasive segments. Consolidation of management structure and manufacturing bases would remain key to our growth process. As you know, we have not only acquired companies, but were also able to seamlessly merge them with our present operations. Overall, we want to be a billion dollar (around Rs 4,500 crore) company in revenue terms in the next three to four years, a rise of around 2.8 times from the current level.

So, would the company see no acquisition in this financial year?
Look, the focus is to consolidate, rather than look out for acquisition. Opto has acquired three in the last financial year. So, we want to spend some time to bring about operational synergies and put these entities on a higher growth path. In the near term, we don't have any acquisition plans.

Your acquisition of weighed on the fourth quarter results. It is also dragging your operating margin . How would complement your bottom line in the future?
You have to appreciate the fact that Opto, which acquired in December 2010 for $64 million, was a loss-making entity at that time. In four months, we managed to get a profit after tax (PAT) margin of nine per cent from a negative seven per cent PAT margin. So, the entity is very much on the path of rapid growth. On the EBIDTA margin, Cardiac has put some pressure on the overall margin level. It would take some time to reach the 30 per cent operating margin level. On the contrary, if you look at parameters like return on asset and earnings per share, the company clocked good growth in the last financial year. Going ahead, Cardiac would complement our overall profit numbers, since there is huge demand for its products in Europe and the US.

Is your current debt level of around Rs 884 crore a matter of concern? Would you raise funds for future growth in the current financial year?
No. Our balance sheet is only leveraged by around 0.6 times,which is healthy. Most of our debt is working capital loan, with a lower interest rate. Also, if you deduct around Rs 235 crore of internal accruals, our net debt level will be even less. As far as fund raising is concerned, we don't have any current plans to raise funds.

Your revenue guidance of 22-25 per cent in 2011-12 seems to be conservative, compared to the company's past growth figures.
We don't give any guidance as such. However, we expect to clock around 22-25 per cent growth in revenue in the current financial year. I don't think the estimate is conservative because growth would be little slower on a higher base. As the revenue base is growing at more than 30 per cent for Opto, current growth projections are realistic.

Opto is planning to shift some its manufacturing bases from the US to India. How would the company benefit from the move?
Yes, we are planning to shift some of our manufacturing bases to India. The process has already begun in the company. However, I would not be able to state the cost advantage figures for the company. We will also invest around Rs 150 -200 crore in the current financial year as part of our capital expenditure plan. While we are going to set up a new facility in Mysore on 33 acres of land, we would also build a manufacturing unit in Malaysia in the near future. Our focus is to bring more operational efficiencies and cost effectiveness to the whole system.

Will the ratio of the invasive to the non-invasive segment see any change in the near future?
Both are growing fast and have a larger market to tap globally. Also, the non-invasive segment has sound potential.

image
Business Standard
177 22