Future-proofing to create values
When people discuss private equity in India, the conversation often centres on financial metrics, exit valuations and market share. However, a new aspect is reshaping those discussions – that is, ESG (environmental, social and governance) issues. Leading this emerging paradigm is Samara Capital, a home-grown investment firm, showcasing how commitment to sustainability and responsible corporate behaviour can transform the entire investment lifecycle. For Samara, ESG is not merely a feel-good add-on – it’s an essential element of value creation and risk management, integrated into the firm’s DNA from initial due diligence through post-investment engagement.
Private equity in India has long been recognised for driving corporate growth. As domestic consumption increases and innovative business models thrive, the competition to identify high-potential opportunities has never been fiercer. Traditionally, a private equity firm’s success might be measured by the net internal rate of return or the magnitude of its exits. However, in a country facing urgent environmental challenges, social disparities and a changing regulatory landscape, the criteria for successful investments are rapidly broadening.
“Sustainability is not an option – it’s an imperative”, says Abhik Mitra, managing director, operations group, Samara Capital. “By embedding ESG at every step – from identifying opportunities to guiding portfolio companies – we are building resilient businesses, prepared to tackle future challenges,” he adds.
Samara Capital exemplifies this new era in Indian private equity. Instead of simply pursuing deals and managing investment portfolios remotely, the firm positions itself as a strategic partner that actively collaborates with portfolio companies to mitigate risks and discover new growth avenues. At the heart of this approach is the conviction that businesses which genuinely prioritise ESG yield better long-term outcomes – for their stakeholders, communities and the firm’s own investors.
Mission-critical
At first glance, ESG might appear to be merely a box-ticking exercise, one that private equity players embrace solely to satisfy limited partners – increasing demands for ethical and sustainable investments. However, for Samara Capital, ESG is the foundation of a sophisticated risk management and value-creation strategy. By thoroughly examining each target company’s environmental practices, employee management structures, technological safeguards and governance processes, Samara ensures it is not caught off guard by regulatory changes or reputational risks.
“We have seen time and again that ESG is not just about compliance – it’s a catalyst for innovation”, notes Mitra. “When we champion sustainable operations or inclusive employment policies, we are effectively future-proofing our portfolio companies and creating long-term value”.
One of the most visible expressions of Samara’s ESG-led focus is environmental stewardship. This extends beyond merely checking a box for regulatory compliance; it involves actively supporting portfolio companies in adopting greener approaches to energy use, water consumption and waste management. Whether setting up zero liquid discharge facilities or installing on-site solar panels, the emphasis is on progressing beyond simple compliance to truly sustainable operations.
Many of Samara’s portfolio companies are, in fact, leading examples of environmental innovation. Some of them – for instance, Sekhmet Pharma and SMT – have developed zero liquid discharge manufacturing processes that optimise water usage and minimise waste. Marengo Asia Hospitals, a healthcare chain, has reduced its energy intensity and Scope 2 GHG emissions year on year, by leveraging energy-efficient equipment and effective resource management. Meanwhile, more retail and agro-tech foods are introducing on-site solar generation to decrease dependency on conventional energy sources and lower their carbon footprint.
Samara’s ESG team works closely with portfolio companies to align environmental programmes with their overarching business strategies,
ensuring that sustainability is not treated as an afterthought but as a core strategic asset.
A second cornerstone of Samara’s ESG playbook is a deep commitment to fair and transparent employment practices. Rather than simply verifying the presence of policies on paper, the firm’s ESG and investment teams seek to understand how effectively these practices translate into day-to-day operations. Areas of scrutiny include a potential investee’s recruitment
processes, diversity and inclusion programmes, worker safety measures and channels for grievance redressal.
Early in 2023, Samara Capital launched an ambitious HR excellence project, led by its Samara Operations Group (SOG). This initiative evaluated and rated employment practices across all portfolio companies on 13 distinct topics and 74 sub-topics. These topics spanned everything from compensation and benefits structures to talent management, performance appraisal systems, and compliance processes. The goal was not merely to identify best practices, but also to implement targeted action plans to address any gaps.
Success stories abound. Esme has made significant strides in gender inclusion, boasting of 17 per cent women in its workforce and a positive gender pay gap. First Meridian, another portfolio star, now has 32 per cent women among its full-time staff and provides comprehensive insurance coverage to all associates.
Meanwhile, Sapphire Foods has devoted 2.87 million hours to employee training and substantially boosted women’s representation in both its overall workforce and management ranks. By driving these improvements, Samara not only supports social responsibility but also future-proofs its investments by nurturing engaged, high-performing teams.
The technology GRC Edge
In today’s hyper-digital world, technology can be both a powerful enabler of growth and a minefield of cyber risks, data breaches and compliance pitfalls. To navigate these challenges, Samara Capital has developed a strong emphasis on Technology GRC (governance, risk management & compliance). This framework encourages portfolio companies to implement robust cyber-security measures, clear technology policies and resilient systems to handle incidents and regulatory audits.
Sound corporate governance is a non-negotiable element of Samara’s ESG strategy. Whether it’s ensuring a robust board structure, monitoring shareholding patterns, or overseeing litigation risks, Samara uses well-defined processes to drive accountability and integrity within its portfolio companies. The firm’s legal and secretarial teams track key parameters on a monthly, quarterly and annual basis, leaving little room for oversight or complacency.
A distinctive highlight is Samara’s carefully crafted 40-point control mechanism, spread across six organisational processes – customer-to-cash, vendor-to-pay, produce-to-plan, HR, finance & overall organisational controls. While the framework might sound technical, its real value lies in preventing governance lapses that could erode stakeholder trust. This approach sets a higher bar than statutory requirements, reflecting Samara’s belief that the cost of non-compliance, be it legal penalties or reputational damage, far outweighs the effort of adopting strong governance structures.
Samara Capital’s approach to investing epitomises active ownership. From the moment a potential investment opportunity emerges, the firm’s teams – investment, ESG and legal – collaborate to assess an array of risks and opportunities. Post-investment, Samara’s ESG specialists guide the company’s leadership in mapping out material ESG issues and designing robust initiatives to address them.
“Each company we invest in has unique challenges and opportunities”, observes Sumeet Narang, who provides a roadmap, resources and accountability mechanisms, so that ESG can become a genuine enabler of growth and not just another compliance requirement.
Crucially, Samara does not impose a one-size-fits-all approach. It leverages its sectoral expertise and past lessons learned to craft tailored plans that integrate seamlessly with a portfolio company’s business model. The team helps set KPIs and timelines, tracking progress against established benchmarks. By working hand in hand with management, Samara ensures that the ESG goals become part of the company’s operational DNA.
Finally, in a rapidly evolving global environment, businesses that fail to adopt strong ESG practices risk obsolescence. Consumer preferences are shifting toward ethically produced goods and services, investors are paying closer attention to sustainability metrics and regulators are imposing tighter standards. By systematically embedding ESG into every facet of its operations, Samara Capital positions its portfolio companies to stay a step ahead of emerging trends. Ultimately, the firm’s success story shows that private equity can serve as a powerful catalyst for sustainable development, particularly in a country as diverse and complex as India. Rather than viewing ESG as an external constraint, Samara treats it as an opportunity for innovation and leadership. The result is a portfolio of companies that are better prepared to tackle the challenges of tomorrow – companies that have learned to see responsibility not as a burden, but as the very foundation of long-term value.