Muniswamy Srinivas wins in remarkable leverage management mid-size category
K.R. Balasubramanyam July 5, 2011
Funds hardly seem to be a problem for Opto Circuits, the Bangalore-headquartered maker of medical devices, when it comes to buying out smaller peers.
Last year alone, it bought Cardiac Science, a company based in Seattle in the US, for $95 million (about Rs 427 crore), N.S. Remedies of Kolkata for Rs 6.7 crore ($1.5 million), and Unetixs Vascular, another US firm, for $9.7 million (about Rs 44 crore).
So far, 19-year-old Opto Circuits, founded by four firstgeneration entrepreneurs, has snapped up 11 companies, four of them big ones.
"We keep our balance sheet deleveraged and make acquisitions usually at a quarter's notice,'' he says.
"We borrow just in time so that we can save on interest cost.'' Srinivas, an MBA and former executive with PSI Data Systems, says Opto began by making sensors for medical use, but figured that acquisitions were the fastest way to meet all the product needs of a customer.
Opto makes over 100 products, with noninvasive devices fetching three-fourths of its revenues.
"Our business is recession-proof and brings us high margins," says Srinivas. He hopes to grow revenues this year by 25 per cent. Last year, Opto reported a profit after tax of Rs 368 crore on revenues of Rs 1,586 crore. Sales in India account for just seven per cent and the US remains its largest market.
Promoters Vinod Ramnani, Thomas Dietiker, Jayesh Patel and Usha Ramnani together hold a 28 per cent stake in Opto, which has debt of Rs 700 crore and a debt-equity ratio of 3:5. It stays clear of highcost rupee debt. "Once, when we had to take a rupee loan, we raised fresh equity soon after the acquisition and quickly paid it off,'' he says. Opto usually goes for foreign currency loans because most of its acquisitions are overseas. "Our debt carried an interest of four per cent last year, which will come down further this year,'' he says.