Ram Charan Company, a little-known Chennai-based outfit headed by Kaushik Palicha, is suddenly making national headlines. A $4.1 billion investment by American fund TFCC International to pick up a 46 percent stake in the company has made everyone sit up and take notice of Chennai’s business world, which otherwise rarely attracts this level of attention.
Ram Charan has been able to attract this massive investment thanks to its technology, which promises to convert unsegregated waste into energy without leaving behind any toxic residue. In a country of 1.3 billion people, which produces massive amounts of waste every minute, most of it unsegregated, that could be a game changer.
Nevertheless, until a few days ago, nobody had heard of Ram Charan. So, the humongous investment into this obscure company, which has a capital base of just Rs 20 crore, is incomprehensible to many. Who are the people behind Ram Charan? What do they do? Chennai is abuzz with intense speculation.
Who they are
Kaushik Palicha and his brother, who jointly own Ram Charan, are fourth-generation entrepreneurs. Speaking to Moneycontrol, Palicha said the group has come a long way from being a distributor of chemicals to become an organisation pursuing deep research and development in the field of waste treatment.
Since it started in 1965 as a single product, single location organisation, Ram Charan has grown to become an organised multi-product industrial distributor.
Being the second largest country in terms of population, India, he said, posed quite a challenge in managing waste. Ram Charan, said Palicha, had carried out research on converting waste into energy. The company’s technology, he says, is environment friendly, as it can be used to convert all types of unsegregated waste into energy, with zero toxic residue.
The company began its research in 2016 and the technology, he says, has been developed in-house. A slew of products are lined up for launch from 2022 till 2024, Palicha added.
Rationale behind the massive valuation
Speaking to Moneycontrol about the TFCC investment, Palicha said: “The valuation was done by the team from TFCC International. It is a combination of value of business growth potential, value of profitability and value of free cash flow that the business can generate,” said Palicha. The investment would flow into the company over two years, he noted.
Palicha added that TFCC would be issued fresh shares to pick up a 46 percent stake in the company and would have two representatives on the board of Ram Charan. Besides the promoters, it will have two more directors.
The Ram Charan chief said details on how the funds infused by TFCC would be deployed are still being worked out. He noted, however, that the company would set up two facilities — one each in Gujarat and Tamil Nadu — to produce effluent treatment equipment. The facilities will be vertical in nature, so that they do not require large land parcels, he added.
TFCC’s green focus
TFCC is an 11-year-old US-based fund with investments in the European Union, Middle East, South Asia and now India. Its Chairman, Chris Curtis, is based in London. The fund, according to Palicha, has invested in low-cost housing projects in Cambodia. It has also invested in Germany and Dubai. The investment in Ram Charan is its first in India, he added.
In a statement on the investment, Curtis said: “We are looking forward to this business, with great anticipation. Technologies such as those promoted by Ram Charan, and the immense headroom for sustainable growth, echoes with our investment objectives and we believe that Ram Charan’s products in the waste-to-energy field and the new generation of energy storage devices will help the environment in a significant manner.”
TFCC has been focusing its investments on the renewables space. “Our Impact Opportunities Fund is focused on the advance of new renewables globally and innovation in climate aligned technology to accelerate the transition to Net Zero. There will be many companies that need our operating expertise and access to capital to achieve their goals. This is the objective of our fund, and we’re sure our impact will be substantial,’’ says the company’s website.
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