ePlanet Ventures, the Silicon Valley based fund which has invested in the likes of Baidu and Skype, recently made its largest investment in India till date, moving from early stage to more late-stage or growth stage investing. It invested Rs 25 crore in Chennai-based agro solutions firm Sree Ramcides. This will also be ePlanet's first solo investment in India, besides its largest. It had earlier invested in three other firms in India - DVD rental company Seventymm, software product vendor Manthan Systems and medical technology firm Trivitron Diagnostics. ePlanet Ventures is actively eyeing the education space and will look at more late-stage or growth stage investing opportunities now as valuations become realistic. VCCircle spoke to Chandrasekar Kandasamy, Managing Director, ePlanet Ventures India to know more about their investment in Ramcides and their plans ahead. Excerpts:
Q. Why have you invested in a crop protection company like Ramcides?
Primarily we were looking at investments in the agro and related space. Agriculture will be an attractive opportunity given the whole food and food security problems, and the availability of arable land, as lots of agricultural land is getting converted in to real estate. And that's the reason why the whole farming community is trying to identify potential opportunities which can improve yield of the crops. We looked at a lot of opportunities in this space and we thought agrochemicals, plant nutrients, seeds etc would be a good chain for us to look into.
Though this company (Ramcides) started off as a crop protection/ agrochemical company, it has a focus on insecticides which is growing. They are also getting into new businesses like plant and micro nutrients, and two years down the line, they will get into other value added products. It can become large in the next 3-4 years through multiple products, which will be a good time from my exit perspective.
Q. Is Ramcides into production and distribution both?
It is a manufacturing company and has three production units – two in Tamil Nadu and one in Jammu. They have a very strong distribution arm through 8,000 dealers.
Q. Do they plan to distribute overseas also?
For overseas distribution, you have to get registration in different markets and that process takes its own time. They have started out with the process of registering their products, but most of their business comes from domestic markets.
Q. Ramcides is also getting into FMCG space and they also launched a detergent product.
That's an area where they started at and the initial sales have been pretty good but it's something we need to evaluate. Our investment in Ramcides is as an agro company. Currently they are an agrochemical company, but they are trying to get into many other related businesses. We will be evaluating the products in the FMCG space, seeing if they make sense or don't, as FMCG has its own challenges.
Q. You have also invested in Trivitron (involved in manufacturing and distribution of medical equipment), which sometime back did an acquisition. How is that investment working for you?
It's again a manufacturing business. They were trying to expand from a distribution business to a domestic manufacturing business by launching a number of low-cost products for emerging markets. As a part of that strategy we did the acquisition in Pune. Going forward, we will be evaluating a number of opportunities. Our plan is 3-4 years down the line to make Trivitron a very strong player in local manufacturing.
Q. How are you looking at companies these days. Is there a change in the way you evaluate companies?
Valuations have come down generally. We have always been looking at opportunities, but now we see an increased dealflow. We are hopeful that we will do more number of investments. Taking into account the current market conditions obviously, valuations have come down and we are seeing a number of good opportunities.
We continue to focus on sectors which we believe will be attractive in the next 3-5 years. We have two investments in technology, one in healthcare and with Ramcides we have an investment in agro. Education is another area, and we are looking at a number of deals in this sector. Logistics and infrastructure are other areas we like. We are waiting and watching to see if any other opportunistic investments come up.
Q. ePlanet has been investing out of a global fund. Do you plan to have an India focused fund?
No. I think ePlanet will always be a global fund. We look to evaluate opportunities in various markets and wherever the opportunity looks attractive we go and invest. We are not bound by limitations of investing in a region or a sector or a stage. We do early stage investments and we also do late stage investments. Our strategy depends upon the country. In Europe and US, we do more early stage investments, while in India, China, Korea and Japan we are looking to do more mid stage growth investments.
The strategy has worked out extremely well for us and given the current recession its also more beneficial for us because we are able evaluate opportunities in various markets simultaneously.
But India is going to be huge opportunity for us and we are evaluating a number of transactions.