Acquisitions have driven growth at Opto Circuits.
From making computer peripherals to high- tech stents and sensors, Opto Circuits has come a long way. Managing director Vinod Ramnani’s decision to switch businesses has clearly paid off. Over the past six years the Bangalore-headquartered firm has made a string of acquisitions, including Criticare Systems and Mediaid which have driven up its turnover to Rs 488 crore in 2007-08.
The idea was to get access to technology and products such as patient monitoring systems and fluid warmers and also to establish a strong presence in foreign markets such as the US and Europe. “Given the stringent laws in these countries, it made sense to buy out companies that already had the necessary approvals,” explains Ramnani.
So it’s not surprising that the US brings in more than half the firm’s revenues while around 26 per cent comes from Europe. The managing director who’s out of the country nearly 20 days a month and enjoys spending time in Frankfurt, believes that the Indian market, too has potential. Says he, “The market today is very small because most of these products are used only by the very big hospitals. However, investments in hospitals are increasing and there are estimates of around Rs 80,000 crore being spent on this sector in the next few years. So there is a huge opportunity in India.”
It may actually not be such a bad idea for Opto Circuits to focus on the home market too given that globally it is up against some keen competition from players such as Boston Scientific, GE and Phillips. Of course, the company is confident of being able to get its fair share of the $10-12 billion global market for medial equipment, even in the current downturn.
Explains the managing director, “There’s no denying that the markets are going through a rough phase but we haven’t been as badly hit in the healthcare space, possibly because our products are used in hospitals.” That’s true because products such as stents are selling especially well in the US even now; incidentally, nearly half the global sales of stents take place in the US and that’s one reason the company is firmly focussed on the US market.
In order to develop technology for medical equipment, Opto Circuits has recently set up an R&D centre in Bangalore. This of course, is in addition to the research work being carried out at the company’s global subsidiaries. The managing director, who’s a Hindi film music buff , explains that although many of these products typically have a long life, there is a need to constantly upgrade them. He’s also proud that he has been able to retain his core team for many years now. “It’s not just about paying well, it’s also about looking after them. That’s why people have stayed with us for more than 10 years.” Given that his company has consistently paid dividends for the last eight years, his shareholders too stay on.
