High capital allocations, low public relations. Long gestation businesses, short decision cycles. High absolute returns, low-to-nil asset attachment. This, in a nutshell, is Arun Kumar’s business philosophy. For someone who’s created three public pharma companies, incubated several smaller entities, and seals a new deal sooner than the ink on the previous one has dried, Kumar’s is an unusual wealth generation machine. One that is now being oiled for a different run.
Consider this: Bengaluru-based Strides Pharma Science Ltd grossed Rs 79.9 crore ($11.5 million) in profit (before tax) from continuing operations, but an eye-rolling Rs 625.8 crore ($90 million) profit from discontinued operations in the year ended March 2018. The 29-year-old public company, Kumar’s first, had consolidated revenues of Rs 2,857 crore ($412 million) in the same year.
It’s a similar story at SeQuent Scientific Ltd (SSL), India’s largest animal health company by far; also the second public company from Kumar’s stable. Total profit from discontinued operations in the year ended March 2018 was Rs 420.6 crore ($60.6 million), against a profit of Rs 10 crore ($1.4 million) from continuing operations on consolidated revenues of Rs 866 crore ($125 M).
At Strides alone, if 10 new subsidiaries were created in 2018, nine got divested, as per its annual report. The web of new entities never stops spinning.
“He works in so many areas and with so many companies that, at any point, a subset [of the business] is on a high even if the rest of the industry is on a downturn,” says a company insider who doesn’t want to be named as he isn’t authorised to speak with the media.
Given all the deals that he has put together over the years, Kumar is arguably “one of the best entrepreneurs India has produced”, says a pharma executive, referring to the frequency of his transactions and distribution of wealth to partners and employees. He doesn’t want to be named because he’s done a several-crore deal with Strides in recent years. After the $1.65-billion sale of its injectables business to global generics giant Mylan Inc. in 2013, Strides returned $525 (pre-tax) million in dividends to shareholders. (Spoiler alert: Promoter groups hold 30.79%, as of March 2018). Additionally, Rs 300-odd crore (~$43 million) was shared with employees.
Kumar declined to be interviewed for this story. “I enjoy being reticent and reclusive. It’s done me good,” he wrote back over email.
In April 2018, Kumar, 58, returned from a one-year retirement-of-sorts to helm Strides again, the only company where he or his family office has a board-level representation. The global pharmaceutical industry headwinds had taken their toll, stocks were down 25%, and the mothership looked shaky.
Towards the end of January 2019, Strides made a string of buying-selling announcements. Curiously, it exited the Australian market, one where it had struck multiple lucrative deals in the past and was among the top three generics suppliers.
