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Astrazeneca Pharma India Ltd.

BSE: 506820 Sector: Health care
NSE: ASTRAZEN ISIN Code: INE203A01020
BSE LIVE 09:27 | 09 Dec 950.00 12.35
(1.32%)
OPEN

950.00

HIGH

950.00

LOW

948.30

NSE LIVE 09:32 | 09 Dec 945.00 7.10
(0.76%)
OPEN

945.00

HIGH

954.00

LOW

942.15

OPEN 950.00
PREVIOUS CLOSE 937.65
VOLUME 26
52-Week high 1348.00
52-Week low 916.00
P/E 115.43
Mkt Cap.(Rs cr) 2375.00
Buy Price 943.00
Buy Qty 5.00
Sell Price 950.00
Sell Qty 16.00
OPEN 950.00
CLOSE 937.65
VOLUME 26
52-Week high 1348.00
52-Week low 916.00
P/E 115.43
Mkt Cap.(Rs cr) 2375.00
Buy Price 943.00
Buy Qty 5.00
Sell Price 950.00
Sell Qty 16.00

Astrazeneca Pharma India Ltd. (ASTRAZEN) - Chairman Speech

Company chairman speech

ANNUAL REPORT 2000-2001 ASTRAZENECAPHARMA INDIA LIMITED CHAIRMAN'S STATEMENT Ladies and Gentlemen It gives me much pleasure to extend to all of you here this afternoon a cordial welcome to this, the 22nd Annual General Meeting of your Company. The Directors' Report and the Audited Accounts for the year ended 31st March, 2001 have been with you for some time. With your kind permission, I will take them as read. The Annual Report, you will have noticed, contains some useful information by way of graphics, which, it is hoped, will enable shareholders to obtain a better perspective of your Company and make a better assessment of its overall performance. Incidentally, this is the first Annual Report of the company bearing its new name. INCREASE IN SHAREHOLDING OF ASTRA PARMACEUTICALS AB, SWEDEN AND CHANGE OF NAME As you know, Astra Pharmaceuticals AB, Sweden ("Astra") acquired earlier this year all of the 25.% equity shareholding in the Company of IDL Industries Ltd., ("IDL"), its co-promoter. With this acquisition, your Company has become a direct subsidiary of Astra and an indirect subsidiary of AstraZeneca Plc. Astra has also acquired a further 4.99%, shares in the Company. As a result, Astra's shareholding in the Company is presently 56.49% . At the Extra-Ordinary General Meeting of the Company held on 29th March, 2001, shareholders were pleased to approve the change of the name of the company from "Astra-IDL Limited" to "AstraZeneca Pharma India Limited", subject to the change being approved,by Central Government. Government's approval having being obtained, a fresh Certificate of Incorporation with the new name embodied therein was issued by the Deputy Registrar of Companies, Karnataka, on 31st May, 2001, from which date the change of name became effective. ECONOMIC ENVIRONMENT The growth rate of the Indian economy expressed in terms of gross DOMESTIC product ("DP") during the year 000-2001 declined to 5.2% from 6.4% during 1999-2000 and 6.6% during 1998-1999. This was in large measure due to the poor performance of the agricultural and manufacturing sectors. The agricultural sector grew by a meagre 0.2% in 2000-2001 as against 0.7% in 1999-2000. The manufacturing sector growth declined to 5.6% during 2000- 2001 compared to the previous year's 6.8%. The services sector also experienced slowdown during 2000-2001. The growth was 9.1% compared to 10.1% in 1999-2000. The capital markets, particularly the primary market, showed a depressed trend during the year due to the economic slow down and serious irregularities committed by certain market participants. The export sector however manifested healthy growth during the year. The Union Budget 2001-2002 introduced the second generation economic reform, including bankruptcy and foreclosure laws, in addition to providing Incentives for economic growth. The Export-lmport Policy has further liberlised the economy, at the same time providing adequate protection to Indian industry and encouraging exports. The overall macro-economic indicators such as low interest rates, good export performance, comfortable balance of payments position and increased foreign exchange reserves coupled with low core inflation, are all conducive to the revival of growth in the economy. A countrywide good monsoon as per expectations and meaningful progress on economic reforms, particularly in the infrastructure sector, will be key factors in the resurgence of the Indian economy. PHARMACEUTICAL INDUSTRY The pharmaceutical industry is one of the vital sectors in the Indian economy. It is probably ranked next only to the Information Technology industry in terms of potential and degree of technology sophistication. According to International Medical Statistic, an internationally reputed market research agency, the Indian Pharmaceutical industry has registered an annual growth rate of about 7% . India is gradually positioning itself a a global manufacturing centre for the pharmaceutical industry, its main strengths being low costs allied to excellent production quality, plus highly trained scientific and other staff, language skills. a well-developed legal system and a rapidly improving infrastructure. Coupled with the above, the Indian government, earlier this year, decided that it would henceforth grant automatic approval for foreign direct investment of up to 100% of equity capital new pharmaceutical joint ventures (the previous ceiling was 74%). The Union Budget 2001-2002 has been well received by the pharmaceutical sector. There has been no change in the excise duty structure; there is an extension of the 150 percent weighted deduction to biotechnology, clinical trial, filing patents and regulatory approvals. This would encourage R&D in the pharmaceutical sector. The reduction in corporate surcharge and dividend tax would also benefit subsidiaries of multinational companies. The much awaited draft pharmaceutical policy was announced in June 2001. lt has recommended price control on bulk drugs with a turnover of over Rs.200 million and 50% market share. In case of drugs with turnover of between Rs.50 to Rs.200 million, a 90% share with a single formulator will invite price controls. The pharmaceutical industry would favour higher turnover limit in the range of Rs.300 to Rs.350 million. The draft policy has proposed the removal of the present provision limiting profitability of pharmaceutical companies. The draft policy also specifies that in case of drugs which are not included in the price control list, but are part of the essential drug list or are used in national health programmes, the National Pharmaceutical Pricing Authority ("NPPA") will monitor the price movement and consumption pattern. It has been. proposed that research and development intensive companies who have achieved the 'gold standard', should qualify for an additional cost of 5% of ex-factory cost in determination of prices of scheduled formulations manufactured by it. Exemption from price control would be provided for a 15 year period to manufacturers producing new drugs developed through indigenous R & D. Drugs and new delivery systems patented under the lndian Patents Act, 1970 would also be eligible for exemption from price control till expiry of the patent. OPERATIONS As you will have observed from the Notes to the Annual Accounts, there has been a significant departure from the practice hitherto followed of reporting the sales figures inclusive of excise duty and sales tax. Henceforth, the sales figures reported shall be the net sales i.e. excluding excise duty and sales tax. This, it is felt, reflects a truer sales picture and is in line with AstraZeneca's worldwide practice. The Company has provided for deferred taxation in the year under review and also for earlier years. The deferred taxation provision has become mandatory from 1st April 2001. Accordingly a sum of Rs.29.11 million has been provided as deferred tax liability for earlier years. For the year under review, the treatment for deferred tax liability has resulted in a asset of Rs.8.86 million which has been used to offset current year's provision. After so providing, the profit for the year was Rs. 113.62 million. The gross revenue comprising sales and other income increased from Rs 1,003.57 million to Rs.1,117.34 mil1ion, despite stiff competition and slowing down of the industrial growth rate. You will be pleased to note that material cost as a percentage of sales registered a further reduction of 2.8% over last year, despite the erosion in the rupee value and additional customs duties. This was achieved through a sustained thrust on import substitution, innovative packaging design and improvements in vendor development of critical raw materials. Your Company continues to maintain its zero debt status. Its fixed deposit programme was upgraded during the year to 'FAA+' by Credit Rating Information Services of India Ltd. ("CRISIL"). The upgraded rating will continue in force till 18th April, 2002. Despite the Company's not too satisfactory performance during the year under review, the Board has recommended a dividend of 40% i.e. at the same level as last year. The Dividend will not suffer tax in the hands of the shareholders. On a brighter note,the year under review has been one where your Company has been the proud recipient of several prestigious awards. The Company's Formulation Plant won the prestigious Gold Award for Quality Excellence. The Bulk Drugs Plant won the Silver Award. Your Company also won the golden Peacock National Quality Award from The Institute of Directors. lt was adjudged third in the category of 'Large Manufacturing Organizations' across all industries in recognition of the high quality practices followed in providing goods and services to its customers. NEW PRODUCT INTRODUCTIONS With the Company's integration into the AstraZeneca Group, a comprehensive review of the entire portfolio of the Company's products is under way so as to gain a better understanding of the Company's distr-ibution network, the market and its trends. The lack of adequate patent protection continues to be a significant inhibiting factor for mutinatonal companies to introduce major original research products in India. However, steps are being taken to register a few AstraZeneca products. The For-mulation Development department is also currently involved in developing products for the Maternal Health Care and Cardio-Vacular segments. CURRENT YEAR'S PERFORMANCE Your Company's performance during the past three months of the current financial year has fallen short of expectations, showing a dip in sales compared to the same period last year. This has been mainly due to increased competition and a general sluggishness in secondary market conditions. The Company is hopeful that the current scenario will show improvement during the next six months; though the overall growth rate for the year may not be of the same order a during the last two years. MODERNISATION AND EXPANSION In its continuing pursuit of enhancing the level of Good Manufacturing Practices followed, a new monolithic flooring was laid in the Tablet, Liquid and Aerosol departments of the Formulation Plant; The company also undertook the upgradation of its Micr obiology laboratory to meet latest international regulatory norms. Another state-of-the-art de-mineralised water plant with a loop system as per present USP norms was commissioned in the Bulk Drugs plant at a cost of Rs.4 million. RESEARCH AND DEVELOPMENT Your Company's R&D laboratory. recognised by the Department of Scientific and Industrial Research, Government of India, continues to actively pursue product innovation, process simplification, import substitution, cost reduction and enhanced quality control. Strengthening of R&D facilities will help contribute to further cost reduction and successful introduction of new products. In the coming years, the major thrust of R&D will be in the areas of custom synthesis, synthesis of intermediate for phase-I and 11 clinical trials. Recognising the importance of R&D activities to the health and growth of the Company, the expenditure on R&D during the year under review was increased. The increased expenditure represented 4.27% of total sales as compared 3.31% in the previous year. Your Company will continue to make substantial investments in R&D activities. CHANGE OF ACCOUNTING YEAR The Company"s Accounting Year, since its incorporation, has been April to March of every year. Following the Company's integration into the AstraZeneca Group which has resulted in it becoming an indirect subsidiary of AstraZeneca Plc, your Directors have decided to change the Company's Accounting Year from April to March to the calendar year, namely, January to December, in line with the reporting requirements of AstraZeneca Plc. Accordingly, the current financial year will be for a nine months period only, i.e. April to December, 2001. The following Accounting Years will be January to December of every year. ENVIRONMENT PROTECTION AND SAFETY A safe and healthy environment is integral to your Company's operations. Your Company has a comprehensive Safety, Health and Environment management policy embracing air, water and noise pollution and disposal of waste. Every employee has a personal responsibility for ensuring that quality and environment aspects are taken into account in the production units as well as the laboratories. Efforts are continuously being made to improve the environment by developing and employing cleaner technology in all of the Company's activities. SOCIAL RESPONSIBILITY The devastating earthquake in Gujarat earlier this year left thousands dead and many more disabled an homeless. It was, by any standards, a horrific disaster. The Company, on its part, contributed life saving medicines though the lndian Drug Manufacturers Association. The employees of your Company also willingly contributed a day's wages to the Prime Minister's Relief Fund. Your Company has also contributed towards the beautification of Hebbal Lake. It organised a free medical check up camp at Kattigenahalli and installed a solar powered Bus Stop at Bagalur Cross. FOUNDATION DAY AstraZeneca celebrate, its Foundation Day on 1st of June every year. Consequently, Foundation Day was also observed on 1st June, 2001 to mark the change of name from Astra-IDL Limited to AstraZeneca Pharma India Limited. The Foundation Day function in Bangalore was inaugurated by the Hon'ble Chief Minister of Karnataka, Mr.S.M Krishna. The function was well attended by employee,, the medical fraternity and many distinguished guests. QUALITY ASSURANCE Your Company's Marketing activities, including Medical Service, have recently obtained ISO 9002 certain from Bureau Veritas Quality International. This is a significant achievement and I am sure all of you will join my colleague on the Board and me in congratulating the management and employees at all level for this. EMPLOYEE RELATIONS Following the expiry of the Memorandum of Settlement between the Management and the Union representing the Professional Service Representatives ("PSRs"), a fresh charter of demands is under negotiation. Employee relations at all levels continue to be cordial. ACKNOWLEDGEMENTS The current year represents an important milestone in the history of your Company. It is the first year of the new century and also the new millenium. It also marks the end of the long association with your Company of IDL Industries Ltd.("IDL'), one of the two founder promoters. the same time, it heralds the entry of your Company into the AstaZeneca fold, an internationally renowned pharmaceutical Group; the fourth largest in the world. I wish to avail myself of this opportunity to thank IDL and its erstwhile representatives on the Board of Directors of the company for their contribution to the steady growth and development of your Company. I also wish to extend a warm welcome to AstraZeneca and their representatives on the Board of Directors of the Company. I am confident that with AstraZeneca's experience, technological expertise, knowledge of the pharmaceutical business and able management, your Company will over time be one of the leading pharmaceutical companies in India. Last, but not the least, I thank all, my colleagues on the Board for their continued support and wise counsel. The employees at all levels merit highest appreciation for their strong commitment and devotion. Their contribution has been as always, significant. Before I conclude, my thanks go to you dear shareholders for the unfailing support, trust and confidence you have throughout reposed, which will, I am certain, be amply rewarded in the years ahead. D.E. UDWADIA CHAIRMAN Place : Bangalore Date : 09.07.2001

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