Company: Investor: Actis In 2010, Actis sold health and personal care product firm, Paras Pharmaceuticals, to Reckitt Benckiser for Rs 3,260 crore. The PE firm sold its 63% stake along with other investors and promoter, Girish Patel, walking away with a four-bagger in about four years. It is a classic PE story: fund brings in professional management, restructures operations, exits at a premium with benefits to all stakeholders. Actis is looking to shape another such story with Phoenix Lamps, where it holds 70%. It has acquired a European distributor of automotive lamps and hived off Phoenix’s loss-making general-lighting (CFL) business. In its earlier form, the CFL business was a supplier to firms like Philips and Wipro. Actis repositioned it as a consumer play and as a competitor to those very firms. In August 2013, Actis acquired the CFL business through a bidding process, for Rs 160 crore, and took it private. The sale helped Phoenix return to profits. “The two (automotive and general lighting) were fundamentally different businesses, requiring different people,” says Shomik Mukherjee, partner at Actis and director on the Phoenix board. “One needed people with business development skills and ability to open doors. The other needed people with sales and distribution, and marketing and branding skills.”
Prior to this, Phoenix had acquired the European distributor of its automotive lamps, despite its inexperience in the area. “It was a bold bet,” says Mukherjee. It was one that Actis had to take because the distributor was in financial trouble, and Phoenix was faced with the prospect of falling sales and unsold inventory.
With the acquisition, it inherited two international brands, Trifa and Luxlite, with a presence in Europe, Latin America and Middle East. Actis now plans to take Phoenix to new markets like China and Brazil. In China, where there are several US and European carmakers, Phoenix plans to position its automotive lamps as an alternative to cheaper Chinese makes and more expensive ones from Philips and Osram. “Now it is seen as a German brand, not an Indian brand,” says Mukherjee. “That’s a huge advantage.” And, in the last 12 months, the Phoenix stock is up 70%.