"FISCAL 2014-15 WAS A PERIOD OF CONSOLIDATION WHERE WE PREPARED OURSELVES FOR THEBIG LEAP."
Fiscal 2014-15 was an important year in Natco's journey in terms of our performancebut more importantly in terms of creating building blocks for profitable business growthover the coming years.
Revenues grew by 11.20% over 2013-14 while earnings before interest tax anddepreciation (EBIDTA) grew by 8.73% over the same period. What is pertinent is that thisgrowth was achieved without any significant contribution from new product launches in theinternational business during the year.
This points to the fact that increasing acceptance of our existing product basket willcontinue to grow our base business enabling us to sustain shareholder value growth.
Setting the building blocks
Fiscal 2014-15 was a period of consolidation where we implemented strategic initiativesthat will facilitate a big leap over the next few years.
We launched the first ever generic version of Sovaldi (manufactured by GileadSciences Inc.) the blockbuster drug used to treat chronic Hepatitis C in India (MarcRs2015) under our brand HEPCINAT. The Company signed a nonexclusive licensing agreement withGilead Sciences Inc. to manufacture and market generic versions of its chronic Hepatitis Cmedicines in developing countries. This product is expected to emerge as an importantbusiness in the current year even as the team is focused on establishing its footprint inother important markets.
Our key API site at Mekaguda and formulation site at Kothur were successfullycertified by the USFDA authorities showcasing our alignment with global best practicesand strengthening the customer's confidence in the quality of our manufacturing processes.
We are investing RS 120 crore towards setting up a world-class formulationfacility at Visakhapatnam dedicated to our international business scheduled to commenceoperations in 2016-17. We expect this to take care of our capacity requirement for thenext several years.
The current year's blueprint
Natco is continuing to invest in strengthening its capabilities in the current year.
We are expanding our existing Kothur formulation complex with an additionalunit. This unit will focus on developing and manufacturing complex chemistries to supportour formulation development pipeline and filings in regulatory markets.
We are upgrading our existing facilities at Mekaguda (API) and Chennai(Cytotoxic API) in strengthening their capabilities in manufacturing APIs raisingproductivity and optimising costs. In addition we are investing in an injectable unit atour existing Nagarjuna Sagar facility widening our delivery platforms and opportunitycanvas.
We understand that our passion in increasing our exposure to complex productsand challenging market needs to be supplemented with stronger research capabilities. Inkeeping with this belief we are more than doubling our R&D infrastructure andsignificantly strengthening our R&D team's knowledge capital by getting on boardexperts from relevant fields.
While we continue investing in improving our infrastructure we recognise thatour people are primarily responsible for driving the business and taking the Company tothe next level. To cement a stronger bond between the Company and the team we plan tooffer ESOPs to our team members
- transforming employees into stakeholders and making them the Company'sgrowth-drivers.
With a low long-term borrowing debt-equity ratio at 0.17 (MarcRs 31 2015) wefeel confident of funding our planned investments in 201516. This positions the Companyattractively in raising funds through appropriate financial instruments when needed.
Optimism for the current year
We continue to be optimistic about our growth in the current year for the followingreasons:
We are hopeful of strong sales volumes from the launch of HEPCINAT in India andare hopeful of launching this product in select high-growth emerging geographies.
We continue to remain hopeful of launching the long-awaited generic version ofCopaxone during FY2016.
We have a robust launch pipeline
comprising niche products for the USA and domestic markets which is expected tosupport our growth aspirations.
Our Guwahati unit (for domestic formulations) commissioned in FY2015 willcontinue to add products and capacity and our Visakhapatnam unit (for internationalformulation) should commence operations in 2016 both of these infrastructure-relatedactivities promise to strengthen business volumes for the Company.
Message for shareholders
Even as the external business environment becomes increasingly volatile due to growingbusiness complexities and increasing competitive forces our team remains driven with thesingular objective to make our business profitable and sustainable. In doing so we hopeto deliver superior returns for our shareholders through good and bad times.
The management team