In Conversation: Exports our primary focus

<b>In Conversation:</b> Exports our primary focus
Trivitron Healthcare was founded in 1997 by GSK Velu, a first generation entrepreneur who built a company on the premise of delivering cost-effective medical technology solutions and services to the under-served. Through successful inorganic synergies with local and global companies, Trivitron boasts of a turnover of over Rs 700 crore and is the largest medical technology company, manufacturing products in India and exporting to over 165 countries. Though the company today has nine factories in five locations spread across geographies, Velu feels the domestic scenario is still not conducive for manufacturing medical equipment to be sold in the domestic market due to duty structures that seem to favour trading more than manufacturing.

He spoke to Financial Chronicle. Excerpts

Trivitron is in the medical technology space which has been suffering from inverted duty structures. How much has the new government’s Make in India policy been beneficial for the sector?

The Make in India initiative has just come into play and the focus still is on only a few categories. If you take medical technology space, there is a long way to go. In this segment, it has touched only one category — X-rays and ultrasound equipment for import of raw material and components. However, as is always the case with Indian governance, it has not been done taking into account all the complications. For instance, new-born kits, if imported, are duty free. But, if we import raw materials for manufacturing the same here in India, one has to pay 30 per cent customs duty. Hence, a lot of focus is needed to allow the domestic manufacturing industry to really grow. While the prime minister is keen to support the growth of domestic manufacturing industry, bureaucracy and red tape continue to mar the intentions. As a result, if you take 100 categories that need clarity to support domestic manufacturing, the problems of emrely 2-3 categories have been addressed so far.

You had set a Rs 1,000 crore turnover target for 2010. How much have government policies hindered your targeted growth?

There are two things we have to consider in this context. Till 2012, we had a distribution arrangement with Boston Scientific during which our business grew up to Rs 200 crore from Rs 5 crore in 2005. Circumstances forced us to pull out out following which we lost a lot to the multinational. That is because Indian policies are more favourable towards trading than domestic manufacturing. As a result, products and devices that are manufactured in China, Malaysia and the US, flood the Indian market. When we set that target of Rs 1,000 crore turnover, we expected 50 per cent of that turnover to come from manufacturing. In fact, we will be a Rs 700 crore company this year. In that, around 85 per cent of our profits and 75 per cent of our turnover comes from manufacturing devices which are largely exported to the overseas market. The domestic market for the same still remains largely untouched because there is no support for our own medical devices and technology companies.

But, is it not an anomaly in a country with 1.2 billion population and considered a growing market?

The government is trying to take initiatives. But, as is always the case with India, everything takes time. There is no minimum time-frame within which things can be set right on these fronts. However, unlike the earlier governments, this government is at least listening to the industry. But, thanks to bureaucracy, it is taking time to see changes on the ground.

Can you update us on the cost-effective Pride Series product range? What all products are available under the series, how has been the growth and how do you anticipate to grow the series?

We have come a long way on that front and we now have nine factories manufacturing a range of products including imaging and other medical devices. We are now present in five locations and nine factories. These are largely growing because of exports and international business. India business is not growing at all on expected lines. In every country, if not private hospitals, at least the government hospitals support local manufacturers and are not bothered whether it is GE or any other big name that has bid. However, that is not the case in India. Buy outside India is happening and hence Make in India is not sustaining in this segment. Hence, we are forced to focus only on exports.

You had recently launched a fund after exiting from Metropolis. What are the kind of start-ups you are looking at for investing and how many investments have you made till now?

Regarding investments, we are looking at growth investments and start-ups led by successful promoters. Healthcare and life sciences will be the core focus and it is also open for technology and any other interesting sectors. However, this is the right time to make investments in India.

Can you update us on your joint ventures with Aloka, Biosystems and IMD? What are your plans to take manufacturing under these joint ventures forward?

Trivitron has joint ventures with Japan’s Hitachi-Aloka Medical Ltd and Spain’s Biosystems SA for manufacturing ultrasound equipment and laboratory diagnostics re-agents respectively. With IMD, Trivitron Healthcare holds 60 per cent share, while IMG group has 40 per cent share in the joint venture. The joint venture between Kiran, a division of Trivitron Healthcare, and IMD ensures that these high technology products will now be manufactured in India for making them accessible and affordable to a larger section of the population with special emphasis to emerging markets such as South and South East Asia, Middle East and Africa, Eastern Europe and Latin America. Apart from manufacturing products like high end C-Arm, DR, high frequency X-ray machines, mobile cathlab, Digital OPG etc, the joint venture will also produce monoblocs/generators to be supplied to other X-ray manufacturers across the world using Kiran’s global network. All the joint ventures are doing well.

You had launched newborn screening kits last year. How has been the demand for the product in the Indian market?

Indian market is still very slow. It depends more on the government programmes. In every other country, the government which conducts the universal screening, the market is growing. The lack of such a system here is preventing growth in a big way in the domestic market. However, the Kerala government has adopted new born screening programme as a mandate in which all babies born in government hospitals undergo mandatory screening for four congenital metabolic disorders, which can have long-term and irreversible developmental outcomes. It is one of the most innovative and well-managed programmes to have been taken up by the state. Even NHM (National Health Mission) has issued an order to all the state health and family welfare departments for mandatory screening of newborns in all government and private hospitals.

govardand@mydigitalfc.com

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