How a renewable deal made Ramcharan $9-billion firm
On Wednesday, a little-known Chennaibased firm Ramcharan Co Pvt Ltd was valued at over $9 billion as Us-based fund TFCC announced picking up a 46 per cent stake in it for $4.14 billion. While there was a virtual press conference on the transaction, there was hardly any detail on why the valuation was so high, the reason for the investor’s India arm having the same Chennai address as Ramcharan and the logic for investing so much in an unknown waste-to-power technology firm.
The day after the anouncement, Kaushik Palicha, owner of Ramcharan, spoke to Business Standard on some of the issues that are central to the deal. He said the company wants to use around $1.25 billion each in two manufacturing units Tamil Nadu and Gujarat. It is also gearing up to set up electric vehicle charging infrastructure in several cities and wants to form a separate arm for chemical trading business.
Ramcharan's business
The group had a humble beginning at Alappuzha in Kerala starting with pepper trading business in the 1960s. As the location shifted to Chennai, chemical distribution became the focus. Kaushik and his brother Divyesh took charge of the business in 1996-97, marking a turning point with foray into rubber and plastic products. From around Rs 60 crore revenue in 2009-10, it became a ~300-crore firm in 2020-21.
According to TFCC International chairman Chris Curtis, Ramcharan is among the top 100 companies in the world in terms of generational activities and has over 700 products and 24 warehouses. Now, the company's client list includes tyre, paint and plastic majors. "The chemical business will be moved to a subsidiary and will be running as a separate business, whereas Ramcharan will take on the manufacturing business," Palicha said.
Why high valuation
The reason for a high valuation, according to Curtis, is the unique technology that Ramcharan has in waste management. "Globally waste management industry is estimated at $400 billion.. . our headroom to grow is humongous. That is why the valuation is so high," Palicha said.
On technology used, Palicha said it will be branded as Entity 1 in India. The company claims that from wastes, it first removes recyclable particles using converters, screens and magnetic technology. Then it is treated using new technology and with some of the additives that Ramcharan makes and gets converted into power.
"Everything that goes in will come back as energy, so there will be no residue. That is where we have an advantage. There is nothing that we are letting out, air or water or solid wastes. It is one of the cleanest technologies in the world," he added. The rising number of cancer cases forced him to think about this clean energy project as a plastic manufacturer, he pointed out.
On the same address that Ramcharan and TFCC India office have, Palicha said when TFCC decided to have a registered office in India early this year, his firm set it up at the Chennai-based company's address. "Anyway, 46 per cent of the company belongs to them. They will have other investment companies in India, but needed a face in Ramcharan," he added.
At the press briefing on Wednesday, Ramcharan officials were not present. The company cited non-disclosure agreement as a reason.