Opto Circuits plans USD $20 million GDR issue

EPP News Bureau - Bangalore

The board of directors of Opto Circuits (India) Ltd (OCIL), India’s leading manufacturer of non-invasive healthcare equipment, has cleared plans for USD $20 million Global Depository Receipts (GDR) with a green shoe option of USD $5 million. The issue will enable the company to go in for brown field expansion and overseas acquisitions. A portion of this issue will be used for setting up a world-class R&D facility in Bangalore. The extraordinary general meeting (EGM) of shareholders to seek their approval for the GDR issue, will be held on May 5, 2005. The GDRs of OCIL will be listed on the Stock Exchanges at London and Luxembourg.

‘‘The need for an expansion of manufacturing facilities has been necessitated because of the huge order inflows that we have started getting from OEMs directly. Our order book position for FY06 has gone up nearly 70% as compared to the order book position in the same period last year. We hope to achieve 40-50 per cent growth in FY06 on the back of these orders,’’ said Vinod Ramnani, chairman and managing director emerging from the Board meeting.

OCIL has been actively targeting OEM’s in developed countries through its 100 per cent subsidiary, MediAid. To meet the increase in order flows, OCIL is gearing up with a brownfield expansion at its existing manufacturing facility in Bangalore. The expansion will involve adding another floor to its existing manufacturing base. Hence, the time to start operations at the new facility will be far less than what is normally the case.

The company is also in the process of more recruiting technical staff to augment its new production lines. The company also plans to utilise the GDR proceeds to fund its ambitious overseas acquisition plans. ‘‘We are in the process of finalising an acquisition in the next few days, and another in the first quarter of FY06. We are in advanced stage of negotiations with three players and have in fact given them an offer too. These acquisitions will substantially help us improve our market share in the global markets. Our equity dilution will not be more than 10% after this GDR issue,’’ says Ramnani.

Incidentally, OCIL has been growing aggressively in the past by acquiring companies locally as well as globally. ‘‘This policy of organic as well as inorganic growth will continue,’’ says Ramnani.

The company recently launched SPO2 sensors, new types of desktop monitors and new generation digital thermometers for the international as well as domestic market. Exports contribute 95 per cent of revenues for OCIL, of which 80 per cent comes from international OEMs and the balance from MediAid.

The strategy is to directly target markets in US and Europe where MediAid has already made inroads to garner higher share of export revenues. For the nine months ended December 2004, exports rose to approximately Rs 50 crore. OCIL had reported sales and profits of Rs 50.43 crore and Rs 12 crore for the 9-month period ended December 2004, as against Rs 39.43 crore and Rs 9.36 crore in the corresponding nine-month period.

Opto Circuits (India) Ltd (OCIL) is the leading manufacturer of non-invasive healthcare equipments in India. The product profile includes digital thermometers, sensors, probes, pulse oximeters, patient monitoring systems and innovative products in the pipeline.

In 2001, OCIL acquired 60 per cent stake in Advanced Micronic Devices to market its equipments in India. OCIL has two businesses (a) OEMs - direct supplier to GE and other large MNCs (b) MediAid (100 per cent US-based subsidiary) - markets OCIL’s brands. OEMs contribute 80 per cent of sales while MediAid contributes the balance. MediAid came into existence with the acquisition of the patient monitoring division of Palco Labs, US, in end-2003.