Dear Fellow Shareholders
The country witnessed a turnaround in Fiscal 2016 on the back of a pickup in economicgrowth. India has emerged as one of the few markets to buck the subdued global scenariohighlighting its strong fundamental base. The Indian economy is expected to grow by 7.6%in FY 2016-17 and further by 7.7% in FY 2017-18 as per projections of The World Bank.
The global pharmaceutical industry is expected to see good growth over the next yearwith robust fundamentals mitigating the adverse effect of a strong US Dollar andincreasing regulation of drug prices. According to Business Monitor International theglobal pharmaceutical market could be worth nearly US$ 1.6 trillion by 2020. Within thisit is expected that companies focusing on complex therapeutic areas should see highergrowth.
Jubilant Life Sciences is an integrated global pharmaceutical and life sciences Companysupplying products and services to customers in over 100 countries. In Life Sciences weenjoy leadership positions across our key products at a global level. We are presentacross the entire Pharmaceutical ecosystem and see ourselves as a one-stop-shop in theglobal Pharmaceutical and Life Sciences industry. We cater to 19 of top 20 pharmaceuticalcompanies and 7 of top 10 leading global agrochemical companies.
The Company has developed a successful integrated business model offering products andsolutions across the entire value chain. This model brings in vertical integration aidingcost efficiencies and also reduces dependence on external suppliers. We have a R&Dteam of 988 people who strive for product innovation. In FY 2016 our spending on R&Dstood at 6% of our Pharmaceuticals segment revenues. Our diversified businesses aresegmented in two major verticals namely Pharmaceuticals and Life Science Ingredients tostreamline efficiencies and promote ease of conducting business. Both these businesssegments are professionally managed by separate management teams. The Company has shown aturnaround in performance during the year with business related concerns successfullyresolved. We will endeavor to maintain the growth momentum and also improve margins andprofitability while maintaining prudent financial policies to deleverage the company. Wewill continue to increase focus towards specialised pharmaceutical solutions. We are alsocommitted to safeguard the environment and maintain safety limit having a triple bottomline approach delivering an enhanced social environmental and economic performance.
Income from Operations in FY 2016 stood at Rs. 58023 million. Earnings beforeInterest Taxes and Depreciation & Amortisation improved by 76% to Rs. 12915 milliontranslating to an EBITDA margin of 22.3%. Profit after Tax was at Rs. 4315 milliontranslated to an EPS of Rs. 27.09 per share for the year.
International revenues accounted for 73% of the revenue mix at Rs. 42595 million. Thisis primarily driven by revenues from North America Europe and Japan. The Companycontinues to expand its presence globally with its products and services reaching out tocustomers in over 100 countries across the globe. In FY 2016 revenues from thePharmaceuticals segment were at Rs. 30548 million and contributed 53% to the overallIncome from Operations. This was on account of healthy growth in our Radiopharmaceuticalsand APIs businesses.
In Solid Dosage Formulations business we witnessed pricing pressures on account ofsupply chain consolidation and also delays in ANDA (Abbreviated New Drug Application)approvals by the USFDA in our main target market of USA. However the ROW (Rest of theWorld) market has shown a good improvement both in top line and bottom line.
All our facilities were successfully inspected by USFDA during the year. TheRadiopharmaceuticals business reported robust performance on account of establishedportfolio of products and relationships with radiopharmacies. The CMO of SterileInjectables business is delivering expected traction on the back of higher capacityutilisation levels after clearing the USFDA warning letters in about a years time.
In FY 2016 Life Science Ingredients segment revenue stood at Rs. 27475 million andcontributed 47% to the overall Income from Operations. Life Science Chemicals performancewas impacted mainly due to lower input prices from crude resulting in decrease in pricesof finished products and lower demand. We witnessed lower demand of some of the end useproducts in the Specialty Intermediates and Nutritional Products business. Profitabilityhas however increased significantly due to higher value added sales in Fine Ingredientsproducts and various cost cutting initiatives and process efficiencies achieved in thesegment. We are also implementing various strategic initiatives to increase capacityutilisation specifically in the Specialty Intermediates business.
The Board has proposed a dividend of 300% per equity share of Rs. 1 face value for theyear which will result in a cash outgo of Rs. 575 million including tax.
In FY 2017 we expect to continue the growth momentum of the Company. Revenue growth inPharmaceuticals segment is expected to be driven by new product launches in Generics andRadiopharmaceuticals growth in Rest of the World business and ramp up of operations inCMO of Sterile Injectables. Our Life Science Ingredients segment margins are expected toimprove driven by strategic initiatives of retrofitting existing plants which will improvethe product mix for the segment from the second half of the year and also cost reductioninitiatives. Our R&D strategy will be guided by our core competence in differentiatedfilings in Radiopharmaceuticals and Solid Dosage Formulations and also increased filingsin ROW markets. Our endeavor to strengthen the balance sheet will continue. We willcontinue to focus on generating operating cash flow in order to reduce the debt and alsomeet our growth plans.
We thank our stakeholders which include our customers vendors bankers andshareholders for continuing their support and maintaining their confidence and trust. Wetake this opportunity to thank Mr. Shardul S. Shroff who resigned from our Board for hisinvaluable contribution. We would also like to express our earnest appreciation to ouremployees across geographies for their contribution and commitment towards achieving theorganisational goals.
|Wishing you all Very Best for the coming year! || |
|Shyam S Bhartia ||Hari S Bhartia |
|Chairman ||Co-Chairman & Managing Director |
|June 15 2016 || |