Opto Circuits to pare debt by raising funds from PE investors and asset sale

Medical device maker Opto Circuits India said that it was working on various options to pare debt, including raising funds from investors and selling the company's land parcels in Hassan and Mysuru, as it tries to chart a turnaround.

In an exclusive interview with Moneycontrol, Chairman of Opto Circuits Vinod Ramnani said that they have given a mandate to a couple of merchant bankers to raise Rs 300 crore funds through convertible debentures.

"We are talking to private equity investors and a healthcare group, but are yet to sign any term-sheet," Ramnani said.

He added that the fund raised is intended to make the company debt free at the standalone level, in addition to giving it some working capital to grow the business.

Alternatively, if the process doesn't go through, Ramnani said the company may consider selling land parcels in Hassan and Mysuru. In Hassan, the company has 250 acres and Mysuru it has 33 acres, both together may fetch the company around Rs 200 crore.

At the consolidated level, Opto Circuits has a debt to the tune of Rs 550 crore.

Ramnani said so far the company managed to repay Rs 180-190 crore debt through internal accruals and entered into two one-time settlement agreements with lenders to pay-off a portion of the remaining debt.

"The business model is good, the business is reviving. It's just because of limited working capital we are unable to grow rapidly," Ramnani added.

He pointed out that the company had undergone various market related challenges across geographies, but overcame a majority of them and started life afresh.

After a three-year slide in business, Opto Circuits was able to stymie losses with a profit of Rs 35 crore and revenues of Rs 225 core in FY18.

Ramnani expressed confidence about sustainability of business operations, due to good growth from both domestic and international business.

He said the company's subsidiaries have started seeing order inflows.

"We have grown at 25 percent in last three quarters, without having any bank support or any additional borrowing," Ramnani said.

Charting turnaround

Headquartered in Bengaluru, Opto Circuits specialises in vital signs monitoring, emergency cardiac care, vascular treatments and sensing technologies.

It exports products to around 150 countries. But things aren't smooth for the company, the device maker fell into a debt trap following a series of acquisitions, some of which were too difficult for it to digest.

The company lost management control over US-based subsidiary Cardiac Science Corporation, a major source of its revenues in 2015, as it defaulted on loans worth $80 million taken from Singapore-based DBS Bank.

Opto Circuits bought Cardiac Science Corporation that automated external defibrillators for $54.7 million in 2010.

Ramnani said they have learnt hard lessons, as they were too greedy to scale up business, unmindful of consequences they were entering.