In an interaction with Mamta Maity, indiainfoline, Vinod Ramnani said, “Opto has state-of-the-art, world-class facilities that are located in USA, Germany and India. Our facilities are operated in clean room environments.”
Give us an overview of the financials?
Total revenue from operations were at Rs 255.6 crore in FY19 as compared to Rs 228.4 crore in FY18; registered a growth of 11.9%. EBITDA has increased by 22.6% to Rs 63.8 crore in FY19 as compared to Rs 52 crore In FY18. EBITDA Margins improved by 218 bps to 25.0% in FY19. Interest cost declined to Rs 3.2 crore in FY19 as compared to Rs 5.8 crore in FY18. Profit after tax increased by 45% to Rs 51.6 crore in FY19 as compared to Rs 35.6 crore in FY18. PAT Margin improved by 461 bps to 20.2% in FY19
Where are your manufacturing facilities located and what is their current capacity?
Opto has state-of-the-art, world-class facilities that are located in USA, Germany and India. Our facilities are operated in clean room environments. The extensive process and engineering capabilities support diverse activities ranging from semiconductor components and optical sub-assemblies, printed circuit board assembly and complete product manufacturing. The setup is also complemented by a complete range of inspection and reliability testing equipment and comprehensive certifying procedures. We also support global purchasing and logistics, including product distribution operations.
What is the percentage of revenues that you have from India and from overseas?
Opto’s major business comes from their subsidiaries in USA and Germany and these companies caters to America, Europe and South East Asia. Diode is the leading brand of Drug coated Balloon, this is the future of heart operations as many patients who don’t want to have foreign elements like stents in their body are moving to this product of Drug Coated Balloon. Worldwide hospitals prefer products manufactured from US or European markets. Criticare Subsidiary is in to ICU vital Monitors – these brands are household name in US dental hospitals. Indian market is flooded with imported machines from China and there is no service support. Opto is working on their subsidiaries in Germany and USA during the current year and will venture in to Indian markets next year with complete end to end service support. So currently majority of Opto’s revenues comes from USA, European markets and all products are sold across 150 countries.
Any new product launch or acquisition in the coming months?
Unetixs Vascular Inc., an Opto Circuits group company, a leader in non-invasive vascular technology, has released the next generation MultiLab Vascular system. Multilab ROODRA is among the first in the industry to provide extreme flexibility and configurability. This one touch, fully functional vascular system provides a 24 inches touch screen monitor on a multi-axis mount for economically correct usage. We are currently not looking for any acquisitions. We are strengthening our distribution network across the World and aggressively marketing our products across the World.
Do you have any capex plans going forward?
We are currently not planning any capex as our current capacities can take care of the demand.
What is the segment wise revenue contribution? To what extent do you see it changing in the coming years?
Opto has product basket from both invasive and non-invasive segments. Under medical equipment segment, the company has vital signs patient monitors, respiratory & anaesthetic care, Data Management & Connectivity, PAD Devices, Defibrillation and Veterinary Care and Sensors, Accessories & Consumables. On the other side the company has interventional products like cardiac stents, catheters and disposables, PTA Balloons and replacement implants. Opto’s major revenues comes from patient monitoring devices, Diode the leading brand of drug coated balloon and Catheters.
Drug coated catheters, which are used to remove blocks in lower than hip blockages in the veins, which may be caused due to diabetes and other lifestyle and lifelong diseases. Brazil is huge market for these products. Currently exporting both invasive and on invasive products to 150 countries.
What are the opportunities and challenges being in this business?
Growing medical tourism, a burgeoning hospital sector and increased patient affluence make India an attractive prospect for medical device companies looking for partnerships. The Indian healthcare sector provides a lucrative growth avenue for companies already operating in the region and for new entrants, particularly diagnostic device manufacturers, pharmaceutical companies and health insurance providers. The diagnostic and medical equipment segment makes up 5 % of the total market, having experienced growth rates of 15-20% over the past few years, and anticipating further growth to $5bn by 2015. This represents a massive opportunity for medical diagnostic manufacturers, and as there are several areas that still need significant development, growth is estimated to continue at this rate for another decade.
There are not many medical devices and invasive medical products companies in the country. Opto has been in to this business for more than two decades and strived to achieve many unique patents both in domestic and international markets. There is 100 years of opportunity in India in this sector as there are not many players in medical devices segment in the country and this business has 30% of EBIDTA, which is very attractive. Nursing homes across India are going to drive market for monitors.
Compete with cheap Chinese imports in to the country without any service support. GST tax structures on diagnostics products. e.g. Instruments attract 18%, reagents/consumables at 12%. This rate is too high and should be brought down to 5%. Such correction will only give further fillip to manufacturing in India. Give focus on building Indian brands abroad and build confidence in West on products manufactured in India. The preferential pricing policy and buy India policy are strategic drivers that can, not only positively impact domestic growth but also benefit the consumers as well as stakeholders.
Another very big deterrent to the growth of this sector is our dependency on imports. Even today 70-80% of our medical equipment is imported. Inverted duty structure is at the root cause of this scenario. Currently the medical devices are importable at zero basic customs duty. On the other hand, the components required by domestic manufacturers to manufacture the same in India are charged 7.5% basic customs duty, thereby penalizing any efforts to make in India.
Besides, lack of regulatory systems with global standards and lack of quality product testing are hampering this sector. At present most of the medical devices can be imported by anyone from anywhere without any regulatory checks. There are rampant imports of low cost, poor quality equipment. All these facts pose challenging for domestic manufacturers.
Please tell us about your client addition and deal wins in Q4?
We have good traction in both in USA and European markets. Company is expecting to reach Rs500 to Rs600 crore in the next three years. Current subsidiaries are Criticare, Unetixs and Mediaid. Company has been making sensors for monitoring devices for Philips – OEM and blood thinners for Estel. We are expecting this business to be stable.