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Meet N Prasad, the turnaround specialist
C H Prashanth Reddy | October 01, 2005
N Prasad's vision is to transform Matrix Laboratories into a highly respected global corporate entity based out of India by 2010 and also enhance stakeholders' wealth. And, he seems to be well on the course to achieve these objectives.
No other Indian pharmaceutical company has grown to a size of Rs 500 crore (Rs 5 billion). The company's turnover grew from Rs 45 crore (Rs 450 million) to Rs 670 crore (Rs 6.7 billion) in just five years' time.
Its net profit increased to Rs 130 crore (Rs 1.3 billion) last fiscal as against a loss of Rs 9 crore (Rs 90 million) in 1999-2000, while its market cap rose to about Rs 3,000 crore (Rs 30 billion) from less than Rs 10 crore (Rs 100 million) in 2000. With sales presence in over 70 countries, two-thirds of the company's revenue is currently being derived from international regulated markets.
For a son of a retired army personnel, it has been a quick rise to the 'Billionaires Club', indeed. After spending his childhood in a village in the Krishna district of Andhra Pradesh, Prasad shifted to a town called Gudivada in the Sae district for secondary education and then to Hyderabad for college.
Next, he completed a post-graduation in science from Delhi University and an MBA from the Institute of Management & Technology, Ghaziabad.
Prasad started his professional career in 1984 as a management trainee in Delhi-based Indian Molasses Company (an associate of United Molasses Co, UK). In 1989, he joined Rhone Poulenc Chemicals (India) Ltd (now part of Sanofi-Aventis) as area sales officer and was elevated to the position of regional sales manager based at Hyderabad.
Soon, he became a turnaround man. The sick companies that he lifted include Medicorp, Fine Drugs & Chemicals and Vera Laboratories. Besides Vorin, all these companies have been merged with Matrix.
Of late, Matrix has made a string of overseas acquisitions, the latest being the Mchem group of China. In June this year, Matrix acquired a controlling stake in Docpharma NV, one of the leading generic drug companies of Belgium, in a deal that can cost up to $263 million.
This is more than three times the $85 million paid by Ranbaxy Laboratories in early 2004 to acquire RPG Aventis SA, the France-based generic arm of Aventis.
Again, on September 21, Matrix announced the acquisition of a 43 per cent stake in Explora Lab SA, a research and development-focused company based in Mendrisio, Switzerland. Then, on September 24, it entered into a long-term business relationship with Aspen Pharmacare Holdings of South Africa.
Both the firms have agreed to have equal stake in an Indian joint venture company - Astrix Laboratories. Three days later, on September 27, Matrix entered into a share purchase agreement to acquire a controlling stake of about 60 per cent in Mchem group of China.
Prasad is the driving force behind Matrix Lab's M&A strategy. The only blot on his otherwise immaculate record could be the proposed merger with Strides Arcolab, which was called off in July as the two parties could not agree on valuation.
Prasad's business model is now being recognised as one of the safest among the pharmaceutical industries in the country. Moreover, his model is not complicated.
Prasad says while many pharmaceutical companies are spending on one segment, Matrix is trying to convert all the three segments - generic, anti-retrovirals and contract research and manufacturing - into growth engines. Three years down the line, all the three segments will contribute equally to the company's turnover.
'We are always trying to perceive risk and how to manage it. We are trying to derisk within the segment,' he says, adding that by institutionalising the organisation, Matrix has derisked itself even from the employees point of view. The company does not have any attrition problems as it has been sharing its wealth with its staff.
"My personality can be split into two halves. Professionally, I am a capitalist and personally, I can be a socialist. Professionally, I concentrate on increasing shareholders' value and personally, I take care of our employees' welfare," says Prasad.
True to this belief, Prasad has transferred 20 lakh (2 million) equity shares from his personal holdings to the MEWA Welfare Trust. The objective of MEWA is to extend financial assistance to the employees and their family members in meeting health, education and marriage expenses, and for house construction.
Is Matrix planning any more acquisitions? "At the end of the day, we have to consolidate. We don't know what kind of opportunities will come to us in future," Prasad says.