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Jubilant Life Sciences Ltd.

BSE: 530019 Sector: Health care
NSE: JUBILANT ISIN Code: INE700A01033
BSE LIVE 15:59 | 15 Dec 680.60 12.55
(1.88%)
OPEN

679.50

HIGH

687.60

LOW

670.85

NSE 15:54 | 15 Dec 681.10 13.30
(1.99%)
OPEN

676.00

HIGH

687.70

LOW

670.20

OPEN 679.50
PREVIOUS CLOSE 668.05
VOLUME 25179
52-Week high 879.10
52-Week low 552.40
P/E 95.72
Mkt Cap.(Rs cr) 10,842
Buy Price 680.60
Buy Qty 18.00
Sell Price 0.00
Sell Qty 0.00
OPEN 679.50
CLOSE 668.05
VOLUME 25179
52-Week high 879.10
52-Week low 552.40
P/E 95.72
Mkt Cap.(Rs cr) 10,842
Buy Price 680.60
Buy Qty 18.00
Sell Price 0.00
Sell Qty 0.00

Jubilant Life Sciences Ltd. (JUBILANT) - Chairman Speech

Company chairman speech

Dear Fellow Shareholders

We are pleased to announce that the Company has reported highest ever revenue andprofits in FY 2017. The differentiated business model focusing on SpecialtyPharmaceuticals - Injectables has enabled us to deliver exceptional results and build astrong base for growth in Pharmaceuticals. The Company has generated strong operating cashflow which enabled reduction of debt and is expected to deliver better results goingforward. Our focus is to strengthen the balance sheet invest in strategic opportunitieswithout increasing debt levels and build strong pipeline or products across ourbusinesses.

India continues to be the fastest growing economy globally and is expected to grow by7.2% in FY 2017- 18 as per projections of the International Monetary Fund. This growth isexpected to further accelerate to above 8% in the medium term due to implementation ofstructural reforms including the transformative GST regime under the current government.

According to Evaluate Pharma the global pharmaceuticals market is expected to grow at6.3% Compound Annual Growth Rate (CAGR) to US$ 1.12 trillion by 2022. The growth ofcomplex therapeutic areas is projected to outpace the growth of the overall pharmaceuticalmarket emphasising the importance of increased R&D in the value chain. Globalagriculture on the other hand has faced some challenges in the last few years but islikely to see a better demand this year for crop protection chemicals in terms of volumeas per a report by Federation of Indian Chambers of Commerce and Industry (FICCI).

Business Objectives

We are an integrated global pharmaceutical and life sciences Company present across theentire pharmaceutical value chain and take pride in our positioning as one-stop-shop inthe global pharmaceutical and life sciences industry supplying products and services tocustomers in over 100 countries. Our diversified businesses are segmented in three majorverticals namely Pharmaceuticals Life Science Ingredients and Drug Discovery Solutions.Each of these segments is professionally managed by its separate management teams headedby respective CEOs. As a responsible corporate citizen we are committed to safeguardingthe environment and maintaining a triple bottom line approach of sustainability throughdelivering a high social environmental and economic performance.

The Pharmaceuticals segment is engaged in manufacture and supply of APIs Solid DosageFormulations Radiopharmaceuticals Allergy Therapy Products and Contract Manufacturing ofSterile and Non Sterile products through 6 US FDA approved facilities in India US andCanada. Our success in this segment is based on several key strengths including aninnovative product portfolio in specialty injectables with high entry barriers and limitedcompetition strong R&D capabilities to back a differentiated pipeline of productsglobal competitive edge due to low cost from vertically integrated operations marketleadership in key products and business segments de-risked business model with lowconcentration risk and a consistent track record of regulatory approvals. As of March 312017 the Company has a total of 922 filings across geographies. Of this 710 filings havebeen approved while 212 filings are pending approval.

The Life Science Ingredients segment is engaged in Specialty Intermediates NutritionalProducts and Life Science Chemicals through 5 manufacturing facilities in India. In thissegment our strength lies in our integrated business model strong capabilities inchemistry low cost of manufacturing through best in class processes and leadershipposition in key products on a global level.

The Drug Discovery Solutions segment provides proprietary in-house innovation forout-licensing purposes and collaborative research and partnership for Drug Discoverythrough 3 world class research centers in India and US.

Performance Review

Our strong performance continued in FY 2017 and the Company reported highest everrevenue and profits during the year. The differentiated business model focusing onSpecialty Pharmaceuticals - Injectables has enabled us to deliver exceptional results andbuild a strong base for growth going forward in our Pharmaceuticals business. The Companyhas generated strong operating cash flow which enabled reduction of debt and is expectedto deliver better results going forward. Our focus is to strengthen the Balance Sheetinvest in strategic opportunities without increasing debt levels and build strong pipelineof products across our businesses.

Total Revenue from Operations was the highest ever at ' 60063 million up 2%Year-on-Year (YoY) with International revenue at ' 42468 million contributing 71% ofthe total revenue. Pharmaceuticals revenues were at ' 31167 million up 8% YoY andcontributing 52% to the revenues. Within this segment Specialty Pharmaceuticals -Injectables displayed a growth of 11% YoY. As emphasised earlier this growth is atestimony to our strategy and the business model wherein we have been able to buildmultiple levers of exciting and differentiated businesses which have helped the businessdeliver robust performance. This has been aptly demonstrated in the consistent growthwitnessed in Specialty Pharmaceuticals - Injectables despite strong headwinds in the USGenerics business from supply chain consolidation. Life Science Ingredients revenue stoodat ' 27076 million and contributed 45% to the revenue. Drug Discovery Solutions revenueimproved 45% YoY to ' 1820 million contributing 3% of the revenue.

Earnings before Interest Tax Depreciation and Amortisation (EBITDA) was 9% higher YoYat record ' 13701 million translating to margin improvement of 143 basis points at 22.8%as against 21.4% in FY 2016. This was led by the Pharmaceuticals segment which reportedEBITDA of ' 9751 million a growth of 9% YoY with a margin of 31.3% as against the marginof 30.9% achieved last year. The Pharmaceuticals segment now contributes about 68% to theoverall EBITDA.

Life Science Ingredients reported EBITDA of ' 4338 million translating to EBITDAmargin of 16% an improvement from 15% in FY 2016. Drug Discovery Solutions EBITDA was at' 258 million translating to EBITDA margin of 14.2%. Depreciation and amortisation in FY2017 was at ' 2914 million as compared to ' 3467 million in FY 2016. Finance cost stoodat ' 3411 million lower by 8% YoY.

Net profit improved by 47% YoY at ' 5756 million as compared to 3918 million in FY2016 with an Earning Per Share (EPS) of ' 36.93 as compared to ' 25.10 in FY 2016.

From a balance sheet perspective In FY 2017 the Company repaid ' 5056 million of debtand the net debt stood at ' 36844 million on a constant currency basis.

During the year Jubilant Pharma Limited (JPL) Singapore a material wholly ownedsubsidiary of the Company raised US$ 300 million of unsecured high yield bonds. Inaddition Jubilant Life Sciences Limited (JLL) also raised ' 4950 million throughnon-convertible debentures during the year. The net proceeds of the funds raised haveprimarily been used to refinance the existing debt of the Company.

Dividend

The Board has proposed a dividend of 300% per equity share of Re. 1 face value for theyear which will result in a cash outgo of ' 575 million including tax.

Outlook

Jubilant Pharma Limited through one of its wholly owned subsidiaries has signed anAsset Purchase Agreement with Triad Isotopes Inc. and its parent Isotope Holdings Inc.("Triad") to acquire substantially all of the assets which comprise theradiopharmacy business of Triad. The closing of the transaction is subject to customaryclosing conditions including contract regulatory and other approvals. The acquisitionwill be funded through JPL's internal accruals and is likely to be earnings accretive.Triad recorded revenues in excess of US$ 225 million in CY 2016 with positive EBITDA andoperates the second largest radio pharmacy network in the US.

JPL has resolved that it will evaluate the option of fund raising through an InitialPublic Offerings (IPO) by listing in an international stock exchange including Singaporein order to strengthen the balance sheet of JPL with a dilution of not more than 15% ofequity.

We expect continued robust growth going forward led by momentum in SpecialtyPharmaceuticals - Injectables and Life Science Ingredients. In FY 2018 improvement inrevenues and profitability is expected.

Revenue growth in Pharmaceuticals segment is expected on account of growth in existingportfolio of products new product launches and ramp up of operations in CMO of SterileInjectables and Allergy Therapy Products. We expect new product launches and capacityexpansions to drive growth in Generics vertical. In the Life Science Ingredients segmentperformance is expected to improve on account of better demand strong price environmentcapacity expansion and launch of new products. In the Drug Discovery Solutions segment thegrowth will be led by addition of new customers and milestone revenues from existing andnew out-licensing opportunities. We will continue with our endeavours to reduce debt andto improve key financial ratios.

Conclusion

We would like to conclude by thanking all our valued stakeholders including ourcustomers vendors bankers and shareholders for continuing their support and upholdingtheir confidence and trust in us. We would like to welcome Mr. Pramod Yadav Mr. SushilKumar Roongta Mr. Vivek Mehra Mr. Priyavrat Bhartia and Mr. Arjun Bhartia on our Board.We would like to thank Mr. Shyamsundar Bang who resigned from our Board aftersuperannuation for his invaluable contribution. We are also deeply grateful to all ouremployees across geographies for their contribution and sincere commitment to taking thisorganisation to greater heights.

Wishing you all Very Best for the coming year!

Shyam S Bhartia Hari S Bhartia
Chairman Co-Chairman and Managing Director
June 15 2017