We will go public once we are $1 billion firm: GSK Velu

Interview with Founder and Managing Director of Trivitron

Trivitron, a key player in the domestic medical technology sector with an annual turnover of Rs 700 crore, expects some of the changes that happened in 2014 would lead to better times this year.

In an interview with TE Narasimhan & Gireesh Babu, company's founder and managing director GSK Velu speaks about major changes for the industry and for the company in 2014 and expectations in the present year. Edited excerpts

The government has cleared 100 per cent  FDI in the medical devices sector under the automatic route. How will this impact your company?

The 100 per cent FDI in manufacturing is going on for several years in the sector already, however, subject to some approvals.

Now, it might only become slightly more convenient, since it is put on automatic mode. But the good news is the government recognised the fact medical devices and pharmaceuticals are two different industries. Besides, FDI is not going to come in immediately as there are anomalies in manufacturing.

In fact, it is much better for us to import from Russia, China, Turkey and Brazil. We have been urging the government to remove tariff anomalies and rework the customs duty and VAT structures. Industry infrastructure status would help us get loans at competitive rates and incentivising Indian companies will help us compete with MNCs, just like China did.

How lopsided are the duty structures now?

Inverted duty structure is one of the biggest problems. If a hospital wants to buy a CT scanner, it pays only nine percent customs duty and imports the equipment without paying VAT. But, if it buys a scanner in India, it needs to pay excise duty, customs duty of up to 28 per cent for some components, and VAT of 5-12 per cent. So, the whole structure supports import. We have been raising the issue for the past 5-6 years, but nobody is listening to us.

How will Trivitron capitalise on the  FDI opportunity in medical devices?

Overall, it will definitely help companies like us. We are open to joint ventures. On aspects related to how much we would dilute and other matters would be decided only if something comes up for discussion.

Any plans to list the company?

Our target is to go to the market within two-four years with a $1 billion market capital. Today, we are a Rs 700 crore company deriving 85 per cent of  profits from product manufacturing having a substantial export element. Domestic sales have a huge growth potential going ahead, but the growth can come only with the right tariff structure and the right support from the government.

Being the largest medical technology firm in the country, we hope all these policies would be conducive so that we can grow much faster. At present, we have two investors -- Fidelity Growth Partners India and India Value Fund. Medical technology companies, though lower in numbers, have good value in the market. We can look at listing favourably in the next couple of years.

How was 2014 for Trivtron and the industry and what lies ahead?

The medical devices industry has got the attention it deserves from the new government. Even in the ‘Make in India’ conference hosted by the dept of Industrial Promotion and Policies (DIPP) on December 29, the Prime Minister’s concluding remarks, have been encouraging for the sector.

For Trivitron, 2014 was a very satisfying year with growth both in India and abroad, and we hope to achieve Rs 1,000 crore plus gross revenues by the next fiscal, with a substantial contribution from India.