Trivitron Healthcare Plans IPO in 2 Years

Trivitron Healthcare, one of India’s largest medical devices maker, may consider an initial public offering within two years to provide an exit to private equity (PE) investors. The Chennai-based company has so far raised around USD 100 million from PE investors India Value Fund Advisors (USD 24.5 million in 2013) and Fidelity Growth Partners in India (USD 75 million in 2012) to fund expansion including acquisitions and building factories. Both IVFA, now called as True North, and Fidelity, renamed as Eight Roads, together are significant minority shareholders in the company, while GSK Velu, the Founder Chairman and Managing Director hold a controlling stake in the company. In an interview to Moneycontrol, Velu said the investment horizon is around 7-8 years and he may consider an IPO to provide them with an exit. Before that Velu has set a revenue target of Rs 1000 crore in the next two years and plans to commercialize a new-born screening solution in the US. The company currently has revenues of Rs 700 crore.

Trivitron has 10 manufacturing facilities in Chennai, Mumbai, Pune, Helsinki and Ankara producing multiple medical equipment like ultrasound machines, analog and digital X-Ray, ECG Machines, patient monitors, reagents, and diagnostic products. Founded in 1997, Trivitron for more than a decade was largely a wholesale distributor and after-sales support provider for multinational (MNC) device makers including companies such as Boston Scientific, Fresenius, McKay, Covidien, Hamiliton Medical, among others. Velu says that he helped the struggling Boston Scientific business in India to grow from Rs 20 crore to Rs 200 crore in a matter of 5 years. For German-devices maker Fresenius he helped them to scale up sales from 20 dialysis to 3800 dialysis machines.

Trader to Manufacturer

But with MNCs changing their strategy to go straight to the market, instead of through distributors – Trivitron was faced with an existential crisis. “Unfortunately, those days the distribution contracts were terminatable. The agreements were one-sided, they put jurisdiction for legal matters in the US and Europe. We are still coming up, and as you know beggars can’t be choosers. All these guys used and dumped us,” Velu says. To avert an imminent fall, Velu decided to switch the strategy from trader to the manufacturer. But it wasn’t easy, as he needs technology to become a producer.

JVs and Acquisitions

He entered joint ventures with Japan’s Hitachi and Spain’s Biosystems for manufacturing ultrasound equipment and laboratory diagnostics reagents, respectively. In 2011, the company acquired stake Kiran Medical Systems, a specialist in x-ray equipment. Trivitron next year bought Finland-based invitro diagnostic solutions company Ani Labsystems for USD 22.2 million. Trivitron further acquired 60 percent stake in Turkish firm Bome Sanayi Urunleri Dis Tic Ltd Sti for 5 million euros in 2016. “In 2010, we were 250-300 crore company, almost all of that was trading. Today we are almost 650-700 crore company, almost 80 percent of that is coming from manufacturing,” Velu said. Velu said he is considering two more acquisitions in the coming quarters.

Velu added that he raised money from PE investors at a low valuation as the company is shifting the gears from trader to the manufacturer. Velu says that there is no support for local medical equipment manufacturers in the country. The tender documents in India with conditions like USFDA, CE accreditation requirements are designed to benefit multinational companies, unlike countries like China, Russia, Turkey that have preferential access to the markets for local producers. China today supports domestic companies, the local companies contribute around 70-80 percent, while in India it is reverse. India’s medical equipment sector is still emerging and dominated by imports. The sector in India is worth a mere USD 4 billion. – Money Control