Paras Pharma, a leading maker of health and personal care products, was founded and managed by the Ahmedabad-based Patel family.
Family learns value of partners
Paras Pharma, a leading maker of health and personal care products, was founded and managed by the Ahmedabad-based Patel family. Actis bought a 23 per cent stake in Paras in 2006 for US$49 million (Dh179.9m) from a handful of investors, including the second Patel brother Darshan. Early last year, it bought out the stake of the youngest brother, Devendra, to take its holding to 60 per cent. But the eldest brother, Girish, kept his stake and is the company's executive chairman.
"The family wanted to bring in a partner who would enable the business to grow to the next level and ?generate significant value for all of us," says Girish Patel. "Having worked closely with Actis as a minority partner, we were confident that they were the best placed to grow the business and create value alongside us." Mr Patel says becoming partners with Actis enabled Paras to attract a high-quality management team, led by S Raghunandan, a veteran of the fast-moving consumer goods (FMCG) business who had previously worked with the industry leaders ITC and Dabur.
It also gave the company access to the Actis network in other emerging markets, for example to help with cross-border mergers and acquisitions. "We have been able to build a high-quality management team which focuses on business results," Mr Raghunandan says. "We built significant organisation capabilities in the area of sales and distribution, sourcing and supply chain efficiencies and a focused marketing and brand management.
"Through these efforts we have been able to record a 50 per cent increase in distribution width, saved 10 per cent of product costs through sourcing efficiencies, which were ploughed back into the focus brand marketing spends. As a result we have seen growth of more than 25 per cent in revenues and high levels of profitability." Last year, Paras had a turnover of about $84m.Paras has modern manufacturing facilities and a distribution network for alternative medical and cosmetic products, with factories at Kalol in Gujarat, and Baddi in Himachal Pradesh. All manufacturing operations have clean zones based on EU and US guidelines.
"Actis had a very good understanding of the FMCG industry, sales and distribution and branding," Mr Patel says. "This is something a traditional pharmaceutical company would not have had. "My long-term interest in the company is to ensure that the brands I have created continue to grow and prosper, even when I and my family are not involved with the business. "Partnering with Actis has ensured the business has got institutionalised and professionalised and will continue to prosper regardless of ownership changes that may happen in the future."