Neuberg, Trivitron promoter GSK Velu plans to take firms public

GSK Velu, promoter of medical diagnostics company Neuberg and India's largest medical equipment/technology firm Trivitron, is planning to take the two entities public in three years from now.

Launched in 1997, Trivitron registered over Rs 700 crore in revenues last fiscal while Neuberg will touch Rs 600 in revenues in this fiscal.

"I want to take both these businesses public in two to three years from now. Neuberg probably has the size and profits to list even today. However, we feel the fundamentals in terms of processes, systems, etc, need to be more strong. It's work-in-process and should be done in under three years."

Trivitron, being a homegrown business, is a great 'Make in India' initiative for him, he said. "While the business is sizeable enough, taking it public immediately will only make it a just another stock in the market. We are looking at some US FDA (US Food and Drug Administration) approvals and a few other big developments in the Trivitron business. Once these are done, we will get the right market valuation in the market. Besides, our existing investors (India Value Fund and Fidelity) still have a couple of years to exit. So, we will wait," said Velu.

Neuberg is an alliance of top laboratories like Anand Diagnostic Laboratory, Supratech Micropath, Ehrlich lab, Global labs and Minerva Labs. It currently has 10 labs and 40 satellite centres for all the five companies put together in South and West India. The management plans to take this number to 100 in the next two years. Neuberg, according to Velu, will be the second largest start-up in India after Reliance Jio in terms of revenues clocked in its first full year of operations.

"Last year, we did Rs 430 crore in a span of less than five months from launching the business in October 2017," he said, adding that growth of his diagnostics business has been much faster compared to Metropolis that has been in the market for a decade now.

A first-generation entrepreneur, Velu had co-promoted Metropolis Labs as an equal joint venture along with Sushil Shah in 1998. However, he exited the Metropolis gradually post 2010, owing to differences with Shah's daughter Ameera, who took over as managing director then.

With close to Rs 500 crore already invested, the Neuberg business will also witness some acquisitions as part of the management's inorganic growth strategy. The management has so far focused mainly on the South and West regions of India where it's considered a very serious player. In other regions i.e, North and East, according to Velu, it will take the company some time to reach the leading player stage.

"We are leading in markets like Karnataka, Gujarat. In Tamil Nadu, we are one of the top three players. Now we are looking at some opportunities in Andhra Pradesh and Telangana that will make us a leader in those markets as well. Some work is happening in Maharashtra as well and we will launch something very substantial here in the next quarter. We are still exploring opportunities in the Delhi market," said Velu, adding that Neuberg is organically growing more than 30% in each of the verticals compared to a market that's growing at 12% to 15%.

The company will invest Rs 300 crore for expansion, and funding the acquisitions in Andhra Pradesh, Telangana, Maharashtra will be done through internal accruals and funds set aside for inorganic expansion. "We will not do 100% acquisition and will keep our partners as substantial shareholders. Our idea is to merge them all and go for a public listing wherein all the partners will have shares in the listed company, thus creating wealth for everyone," said Velu.

Of the total revenues, international markets contribute 40%, of which 60% comes from Africa where Neuberg had acquired a very large asset earlier. "That was in South Africa and now we are focusing on East or sub-Saharan Africa. So overall, Africa forms a big part of our growth strategy. Then we will have some technology ventures in the US and European markets. I am trying to do things very differently, compared to how it's done at Metropolis. Our focus is more on new generation techniques, which currently generate 10-12% of Neuberg's revenues," said Velu. The percentage will increase in the coming years.

Currently, new generation techniques are under 5% of overall revenues for other players in the market as a majority of it comes from conventional tests contributing 90% or more in terms of revenues. "There is technological disruption happening already in the developed nations and my sense is that in the near future, people will not go to a lab for routine testing. Laboratories will be dealing with rare (genetic, metabolic) and complicated (cancer, Alzheimer's, dementia, Parkinson's, etc) diseases where deeper analysis will be required," Velu said.