Generation Next to step in at Thyrocare

Velumani is inducting both his children into business with bigger share in the hands of daughter

As a businessmen, what do you look forward to once you have set up shop, put in several years building the business and achieved a reasonable degree of success? That your next generation will love what you do and want to take it further? Embrace it? Expand it? And maybe even excel at it?

That is the position in which A Velumani, the 54-year-old chief of Thyrocare, finds himself as he decides to induct both his children — Anand, 27, and Amruta, 25 — into the business.

Of the two, the bigger challenge — Nuecleur — a business he started in 2011 will be steered by Anand (an MTech in biotechnology who intends to pursue his PhD) while daughter Amruta who is already on the board (MSc in biotechnology) will navigate the ship that’s already on course — Thyrocare — on a safe, steady path as it moves into its next phase of expansion.
 

Both businesses — Thyrocare and Nueclear — are to be grown and expanded. While the former went public, the latter is at a more difficult stage. Nueclear was formed since Velumani had the money to spare at the time.

How Nueclear was born

The first investors into Thyrocare — CX Partners — came to Velumani in late 2009 (he started the business in 1995) when he didn’t really need the money for his business. “So, I quoted a high figure of Rs 600 crore (in 2009) as the valuation although my turnover at the time was Rs 60 crore”.

Since he didn’t really need the money, Velumani decided to quote higher than a likely figure. The investors wanted to value the company at Rs 500 crore but he instead suggested that if he performs as he promises, the valuation should be done at Rs 600 crore but if his performance falls below expectation, they could do the valuation at the lower rate.

The agreement was signed in December 2010 and the company performed better than expected; he diluted 27 per cent for Rs 180 crore. But, the dilution was not done because he needed to bring more money into the company; it was secondary.

During 1982-1995, Velumani worked with Tata Memorial Hospital on loan from Bhabha Atomic Research Centre (both units of department of atomic energy). He worked there at the radiation medicine centre to look at the “effect of radiation on curation”. This had given him an exposure into the world of cancer and its detection.

So, when he had the money available, Velumani decided to use it to set up Nueclear, which offers PET-CT scanners (radioactive glucose is injected to trace or monitor cancer in the body), one of the fastest growing and relatively new technologies in the field. While the world started using PET-CT for cancer detection and monitoring in 2000, it entered India around 2003.

While ultrasounds and magnetic resonance imagings indicate the presence of cancer, a PET-CT confirms it. It is mainly used for monitoring – after treatment has been given (estimating reduction in size of tumour).

Nueclear commissioned its first PET-CT imaging centre at Mumbai, followed by Delhi and Hyderabad in 2014. Soon, Nueclear’s PET-CT imaging facilities would be available in Chennai, Bengaluru, Coimbatore, Raipur and Kolkata.

However, the technology is both capital-intensive and expensive so it has been slow to grow. With the cost of scanners at $1 million, the spread of it in India has been slow. India currently has around 100 scanners (50 per cent are in institutes) of which Nueclear has five. Again like Thyorcare, Nueclear offers the PET-CT at Rs 9,999 while most competitors charge anywhere between Rs 15,000 and Rs 20,000 for the same test. The business has just recently broken even.

Anand Velumani argues the business has plenty of scope since the US already has around 1,000 scanners with one fourth of India’s population. “We are in the right place if a bit early,” says he.

Velumani calls Nueclear a “coconut and not a banana business”, referring to how long it takes to bear fruit and results. “I could have gone more aggressive on this but the heavy capital requirements and returns which are not commensurate to make this an intimidating business. Laboratory business is more lucrative” says Velumani. So while he is going a bit slow on it, he feels “someone must do it”. That someone is now to be Anand, his son.

Thyrocare: In autopilot mode

Velumani has decided to entrust the less rocky boat — Thyrocare — to his daughter Amruta who is already on the board. Currently, 50 per cent of the company’s revenues come from Aarogyam (this is a series of investigative tests that are done for a fraction of the cost that many laboratories and hospitals charge).

Thyrocare today has six laboratories across India but the plan is to develop a laboratory in around 25 states, of which around six will come up in 2017. It takes around 12 months for each centre to become profitable, though the existing six centres all turned profitable within three months of opening.

Always philosophical in his view, Velumani says he is fortunate that both his children have “fallen in love” with his business. He says a grounded upbringing has ensured that his children don’t have 95 out of the 100 weaknesses that afflict the children of the wealthy (“they don’t go to bars or drive high-end cars at high speeds,” he says). That reassures him that handing over the reins of his carefully nurtured businesses slowly — while he remains the main guiding force — is not as big a risk as it can be for some others. “If Anand can make Nueclear as big as Thyrocare in due course, that will be success,” he adds, laughing and adding that if his daughter doesn’t allow her brother to overtake, that would mean an even bigger success.

A SNAPSHOT

• Thyrocare currently has six laboratories
   
• The plan is to develop a laboratory in about 25 states
   
• Of these, around six will come up in 2017
   
• Its first PET-CT imaging centre was commissioned at Mumbai, followed by Delhi and Hyderabad in 2014
   
• Its PET-CT facilities would soon be in Chennai, Bengaluru, Coimbatore, Raipur and Kolkata