Schroder Ventures to fund only companies targeting middle class

"Our Indian focus is on companies whose products are directly used by the burgeoning middle class in India," declares Mr. Deepak Vaidya, country head, India, Schroder Capital Partners (Asia) Ltd. Industries that qualify under this classification are pharmaceutical, healthcare, retail and the like. "Segments like agriculture, steel, cement, infrastructure and even dot coms are out of our vision," he says.

According to him, Schroder Ventures has invested around $ 100 million in India out of its two Asia Pacific funds. He adds, "We haven’t concluded any major deals for our second fund, which has a corpus of $ 500 million."

Some of the Indian companies into which Schroder Ventures has put its money are Orchid Chemicals & Pharmaceuticals Ltd, Apollo Hospitals, Blue Dart. The Rs 175 crore investment in Orchid Chemicals is one of the biggest for the fund in the country. The investment has got the fund a berth in Orchid Chemicals'' board.

Though there is no lock-in period for its investment in Orchid Chemicals -- "We don’t accept any deals where there will be a lock-in period" -- Vaidya says that the fund sees Orchid Chemicals as a long term investment. It may be noted that Orchid Chemicals'' scrip, which went to dizzy heights to touch Rs 400-plus, came tumbling down after the union budget and after a not-so-inspiring performance last fiscal.

"Actually we are very much impressed with the Indian pharmaceutical industry as it has great potential for growth," says John Cheesmond, partner, Schroder Ventures Life Sciences Advisers (UK) Ltd, London, and a board member in Orchid Chemicals.

Interestingly, it seems Orchid Chemicals is charting its new growth plans upon the advice of Schroder Ventures. Says Mr Cheesmond, "The company has to consolidate its core activity in the bulk drug segment, get FDA approval for its plants to establish footprints in regulated markets and establish a formulation unit in India." And it is precisely this prescription that Orchid Chemicals is following.

Schroder Ventures, with its contacts in the pharmaceutical industry worldwide, is trying to locate a global partner for Orchid Chemicals in its endeavours, including doing contract research and global marketing of its products.