‘Matrix was always for giving shareholders an exit route’

After working his way forward from being a professional executive in a pharma company to a promoter of the pharma major Matrix Laboratories, Nimmagadda Prasad is now an entrepreneur with interests in multiple and unrelated segments. After handing over Matrix to Mylan, the focus now is on managing the investments with an objective of creating pancha ratnas (five jewels), Prasad reveals in an interview. Excerpts:

After handing over Matrix Labs to Mylan, you seem to have turned into a serial entrepreneur. Are you still with the pharma sector or is there any plan to diversify into new areas?
Yes, after Matrix, I started looking at various other sectors basically from an investment point of view. But, even during the Matrix days, I was keen on evaluating options in other areas. With that plan in mind, I had decided to create pancha ratnas (five jewels) for myself to invest. Pharmaceuticals, healthcare, hospitality, infrastructure and media are the five sectors I was always keen on investing in. Except hospitality, today I have invested in all the other sectors. The two hospitals I have invested in (Care and Asian Institute of Gastroenterology) are doing well. In media, I have invested in Sakshi (a newspaper and TV network run by Y S Jagan who is the son of Y S Rajsekhara Reddy, the former Andhra Pradesh chief minister who recently died in a helicopter crash) and Maa TV (a Telugu entertainment channel). As far as the infrastructure sector is concerned, we are developing two ports at Nizampatnam and Vadarevu. I have also invested in Bharati Cements (formerly Raghuram Cements).

Typically, a port project is always seen as a real-estate activity with the port as just the front end of the business. How do you react to that?
The port activity is not about real estate. We need that kind of acreage to create economic activity which is linked to the port facilities. But, believe me, you can never run a company based on real estate. We don’t create anything there if it is about real estate. My belief is that real estate can’t be an activity for a corporate. So, the port facilities are going to create livelihood and support the lives of thousands of people living near the ports.

Does that mean Mr Prasad will never venture into real estate?
I am keeping off real estate as a business. I do have investments of my own. I own land in some parts of the state. But that’s purely a personal investment. It’s not for doing business. You don’t need a company for investing in real estate. It’s a quick decision. People will buy and sell land. That’s it. I do a lot of investment. I also buy and sell land. But it is more on a personal level.

How much are you investing on developing the ports?
Typically, the ports would be spread in about 25,000 acres. But we are still working out the financials and we would not like to talk about it till we achieve the financial closure.

But you are always seen as an entrepreneur who believes in exiting a business after it reaches a particular stage. For instance, your acquisition of Docpharma of Belgium is said to be one such effort to create value and sell off the business. Is that true?
The Docpharma acquisition was primarily to enhance shareholder value. I strongly believe in providing an exit route to shareholders over a period of time. On enhancement of shareholder value, the shareholder would be satisfied with his investment and make use of the exit route. We thought Docpharma would also provide us with the best distribution model for our (Matrix’s) products.

Don’t you think the Docpharma deal was a mistake?
The Docpharma acquisition was strategically justified. But I think the execution of the integration was not right. The acquisition gave us an opportunity to further enhance our footprint by going into the European market. But at that point, we did not have enough time to strategize properly on the execution part.

Would Mr Prasad ever sell out Matrix if there was no Docpharma?
Even if there was no Docpharma, the focus would still be on providing an exit route to the shareholders by enhancing the value of their investment.

From being a citalopram player, Matrix has played its cards to ally with former US president Bill Clinton to sell anti retrovirals (ARVs) in some developing markets. How much revenue does the Clinton Foundation provide to Matrix?
The Clinton Foundation does not buy anything from us. They only facilitate the supply of drugs to affected markets by creating the necessary logistics. At a time when Indian products did not have much credibility in the market, the Foundation gave buyers the required confidence about the products. They had set up the distribution channels. They prepared the protocols for compliance and guided the teams in the affected countries on usage of the drug.

Do you discuss price with the Foundation?
Yes, even today, the Foundation negotiates with us on the price. But they don’t buy it directly. They negotiate the price on behalf of the governments willing to buy the product.