After the sale to Dr. Reddy’s Laboratories in 1999, Mr. RK Ramanathan, the founder of American Remedies, wanted to invest in individuals who aspired to be entrepreneurs and had ideas.

In addition to money, Mr. RK Ramanathan wanted to offer budding entrepreneurs the value of his experience in starting and building a business.

Discussions with his son, KR Krishna, led to a decision to turn angel investors.

However, many well-wishers cautioned against angel investing, citing high risks. Conventional wisdom held that angel investing was highly risky. Advisors recommended that investors play it safe by allocating only a small portion of wealth to angel investing and that the major part go to a well-diversified public equity basket through mutual funds.

In responding to this situation, we fell back on one invaluable insight our experience gave us: True risk lay in not knowing what we were doing (for instance, American Remedies was more risky as a public equity than as a start-up).

This insight led us to a liberating understanding. On the one hand, investment in a public equity via a mutual fund gave a sense of false comfort by blinding an investor to the risks inherent at the company and fund levels. On the other hand, a well-built and closely monitored basket of angel investments could deliver superior returns without excessive risk. Needless to say, it also promised much more excitement and fun along the way than parking wealth in a mutual fund.

And so, KR Krishna kick started the angel investments with Higro Farms in 2000. RK Ramanathan decided to play the role of a mentor with a clear understanding that Krishna takes the calls and is responsible for the results.

In 1976, Mr. RK Ramanathan started American Remedies as a sole proprietorship. In 1979, Mr. VS Raman came on board as a 50% partner. That year, the Company set up a manufacturing unit near Ambattur (Chennai).

Between 1979-84, American Remedies’ monthly sale rose from Rs. 3 lakhs to Rs. 25 lakhs and a strong presence in South India was created.

In 1984, Mr. GK Ramani joined American Remedies, making it an equal 3-way partnership. A year later, Mr. SR Ramaswamy joined the Company as a director, making it four partners holding 25% each. In the same year, the Company also introduced stock options.

From 1985-92, American Remedies achieved rapid growth and touched a turnover of Rs. 30 crores.

In 1995, American Remedies went public, with a portfolio of 40 brands and a turnover of Rs. 50 crores. Shares were priced at Rs. 75/-. The equity raised through the IPO was invested in a backward integration strategy of bulk drug manufacturing.

However, the bulk drug unit did not take off as expected. Cost and time over runs resulted in high pressure on the Company’s cash flows. In a strategic decision, the unit was sold to the Sanmar group.

This turn of company events coincided with major changes in the market as India was set to sign GATT. Looking at the bigger picture, American Remedies decided that a sale would be the best way to protect the interest of the shareholders and other stakeholders.

In November 1999, Dr. Reddy’s Laboratories made an offer of Rs. 10 + 175 for American Remedies. The promoters accepted the offer, concluding the American Remedies journey on a high note.