Thyrocare's Velumani: Owns no car, lives in a small quarter, but helms a Rs 1,320-crore company
ICICI Bank has just acquired a 5% stake in Thyrocare Technologies from PE fund CX Partners forRs66 crore, three people with direct knowledge of the deal said.
A Velumani doesn’t own a car. He makes do with a small living quarters above his large lab in Navi Mumbai, but still ends up sleeping in the lab most nights. Nothing in his lifestyle will give away the fact that the valuation of Thyrocare Technologies, the chain of diagnostic laboratories he founded in 1996, has doubled to Rs1,320 crore in three years.
ICICI BankBSE 6.00 % has just acquired a 5% stake in Thyrocare Technologies from PE fund CX Partners forRs66 crore, three people with direct knowledge of the deal said. That pegs the company’s valuation at Rs 1,320 crore.
When CX Partners had purchased a 30% stake in the company in 2010, the valuation was Rs627 crore. CX Partners had paid Rs188 crore in that deal. A spokesperson for CX Partners refused to comment on the recent Rs66-crore deal and the ICICI Bank spokesperson did not respond to emailed queries. There is nothing remarkable about Velumani, except perhaps his love for Rajnikant. But his company’s growth will do Velumani’s film idol proud.
It has a network of 700 franchises that conduct more than 20,000 investigations daily. Velumani, son of a landless farmer from Tamil Nadu, hopes his company will notch up revenues ofRs150-160 crore this financial year on the back of aggressive expansion funded by large doses of PE money. Thyrocare has the lowest rates for diagnostics services in the country; a strategy that Velumani claims is by design.
“I may have the lowest revenues in the business and my costs are the lowest too, but our profit is the highest in the industry,” Velumani told ET. Thyrocare’s EBITDA margins, he claims, are about 60%.
“The diagnostics business is a high growth one. Since healthcare costs are borne by the individuals, there is a need for customised and branded pathological and diagnostics labs,” said an investor in the company, requesting anonymity. “That is where businesses like Thyrocare score over others. We expect it to grow manifold.”
THE DEAL
“No money is coming into the company (from the recent deal). Since CX Partners holds large stake in the company, it is offloading it bit by bit,” an investment banker with knowledge of the development said.
CX Partners’ founder and managing partner Ajay Relan and partner Vivek Chhachhi are on the board of the unlisted diagnostics provider. “Though the company has seen exponential growth in last 17 years, sustaining it will become difficult with competition increasing manifold,” said a senior executive at a New Delhi-based rival firm.
ICICI BankBSE 6.00 % has just acquired a 5% stake in Thyrocare Technologies from PE fund CX Partners forRs66 crore, three people with direct knowledge of the deal said. That pegs the company’s valuation at Rs 1,320 crore.
When CX Partners had purchased a 30% stake in the company in 2010, the valuation was Rs627 crore. CX Partners had paid Rs188 crore in that deal. A spokesperson for CX Partners refused to comment on the recent Rs66-crore deal and the ICICI Bank spokesperson did not respond to emailed queries. There is nothing remarkable about Velumani, except perhaps his love for Rajnikant. But his company’s growth will do Velumani’s film idol proud.
It has a network of 700 franchises that conduct more than 20,000 investigations daily. Velumani, son of a landless farmer from Tamil Nadu, hopes his company will notch up revenues ofRs150-160 crore this financial year on the back of aggressive expansion funded by large doses of PE money. Thyrocare has the lowest rates for diagnostics services in the country; a strategy that Velumani claims is by design.
“I may have the lowest revenues in the business and my costs are the lowest too, but our profit is the highest in the industry,” Velumani told ET. Thyrocare’s EBITDA margins, he claims, are about 60%.
“The diagnostics business is a high growth one. Since healthcare costs are borne by the individuals, there is a need for customised and branded pathological and diagnostics labs,” said an investor in the company, requesting anonymity. “That is where businesses like Thyrocare score over others. We expect it to grow manifold.”
THE DEAL
“No money is coming into the company (from the recent deal). Since CX Partners holds large stake in the company, it is offloading it bit by bit,” an investment banker with knowledge of the development said.
CX Partners’ founder and managing partner Ajay Relan and partner Vivek Chhachhi are on the board of the unlisted diagnostics provider. “Though the company has seen exponential growth in last 17 years, sustaining it will become difficult with competition increasing manifold,” said a senior executive at a New Delhi-based rival firm.
Thyrocare shares up to 60% of revenues with its franchises, the highest in the industry. Others like Religare-promoted SRL Diagnostics, Dr Lal Pathlabs and Metropolis share up to 30%. But a centralised hub and spoke model has helped the company cut costs tremendously. Blood samples are collected from patients across the country and transported to Mumbai, where the reports are prepared and emailed the next day.
“We innovated on what we call air cargo, where the cost of transporting a sample is below Rs5. We work by the night to prepare the reports and deliver results the next day,” said Velumani. “The big four players have around 10% market share whereas 90% of the market is dominated by unorganised players,” said Dr Rana Mehta, executive director, healthcare for Pricewaterhouse-Coopers India. “Within healthcare, the diagnostics business will grow faster.”
THE RAJNIKANT EFFECT
Velumani believes in his celluloid hero’s words: “All your limitations will become your strengths one day.” That’s what fueled his ambition to start his own diagnostics company when he was a PhD student of thyroid chemistry at Mumbai University.
With a desire to help hapless patients waiting outside Tata Memorial Hospital in Mumbai he started the company with just Rs1 lakh in 1996. The laboratory business was not capital intensive nor heavily dependent on expensive machines.
Velumani deposited Rs50,000 for his first lab and purchased a gama rays machine for another Rs50,000. Sumathi, his wife, quit her job at the State Bank of India to become his first employee. “Since the business generates cash from day one, you don’t need too much capital.
You can use that cash earned to expand the business further,” said Velumani. Today,Thyrocare Technologies specialises in immunodiagnostics, testing blood samples for thyroid disorders, other pathological testing and radiology with a focus on preventive healthcare.
(Brand Capital, which is part of the Times Group that publishes The Economic Times, is an investor in Thyrocare Technologies.)
“We innovated on what we call air cargo, where the cost of transporting a sample is below Rs5. We work by the night to prepare the reports and deliver results the next day,” said Velumani. “The big four players have around 10% market share whereas 90% of the market is dominated by unorganised players,” said Dr Rana Mehta, executive director, healthcare for Pricewaterhouse-Coopers India. “Within healthcare, the diagnostics business will grow faster.”
THE RAJNIKANT EFFECT
Velumani believes in his celluloid hero’s words: “All your limitations will become your strengths one day.” That’s what fueled his ambition to start his own diagnostics company when he was a PhD student of thyroid chemistry at Mumbai University.
With a desire to help hapless patients waiting outside Tata Memorial Hospital in Mumbai he started the company with just Rs1 lakh in 1996. The laboratory business was not capital intensive nor heavily dependent on expensive machines.
Velumani deposited Rs50,000 for his first lab and purchased a gama rays machine for another Rs50,000. Sumathi, his wife, quit her job at the State Bank of India to become his first employee. “Since the business generates cash from day one, you don’t need too much capital.
You can use that cash earned to expand the business further,” said Velumani. Today,Thyrocare Technologies specialises in immunodiagnostics, testing blood samples for thyroid disorders, other pathological testing and radiology with a focus on preventive healthcare.
(Brand Capital, which is part of the Times Group that publishes The Economic Times, is an investor in Thyrocare Technologies.)
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