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Neuland Laboratories Ltd.

BSE: 524558 Sector: Health care
NSE: NEULANDLAB ISIN Code: INE794A01010
BSE LIVE 15:57 | 26 Sep 1015.35 21.65
(2.18%)
OPEN

994.80

HIGH

1031.15

LOW

990.00

NSE 15:40 | 26 Sep 1018.45 28.20
(2.85%)
OPEN

963.35

HIGH

1033.00

LOW

963.35

OPEN 994.80
PREVIOUS CLOSE 993.70
VOLUME 1192
52-Week high 1680.00
52-Week low 877.15
P/E 36.07
Mkt Cap.(Rs cr) 902
Buy Price 0.00
Buy Qty 0.00
Sell Price 1015.35
Sell Qty 200.00
OPEN 994.80
CLOSE 993.70
VOLUME 1192
52-Week high 1680.00
52-Week low 877.15
P/E 36.07
Mkt Cap.(Rs cr) 902
Buy Price 0.00
Buy Qty 0.00
Sell Price 1015.35
Sell Qty 200.00

Neuland Laboratories Ltd. (NEULANDLAB) - Chairman Speech

Company chairman speech

Dear Shareholders

At the outset let me take the opportunity to thank you for constantly engaging with usacross multiple forums and sharing your valuable feedback from time to time. Yoursuggestions and constructive criticism go a long way in enhancing our messages andcorporate governance practices at every given instance. We believe that these continuousimprovements will put in place a company that will be cherished by the shareholders notonly for its financial performance but also for upholding highest values of ethics andgovernance.

Operationally fiscal 2016 has been a rewarding year for your Company as we went pastRs. 500 crores for the first time in our history. However what is more satisfying is thatthis growth did not come at the cost of profitability. We ended the year with a revenue ofRs. 511 crores which was 9% up over the last year. The EBITDA at Rs. 81.5 crores increased21% and this translated to a EBITDA margin of 16%. In keeping with the financialperformance the Board had recommended a dividend of 20% (' 2 per share).

Looking at the financials this year it would have been hard to imagine this over 4-5years ago when your Company was caught in the midst of business and financial turmoil. Thefact that we have bounced back is a clear demonstration of the resilience that yourCompany has exhibited to tide over the difficult times. And let me reiterate that this waslargely accomplished only due to the unflinching support and good wishes of you our dearshareholders. So let me just spend a few thoughts on what has changed in the last fiveyears.

Neuland has traditionally stayed rooted to its positioning as a pure play API Company.This was a focused and deliberate strategy adopted many years ago on the back of ourstrong quality systems compliances to regulatory agencies with a strong research andintellectual property base. This strategy of ours has endeared itself to our customers whodo not see any conflicts in our relationship and this has enabled us to be a key supplierto many of our customers.

You would also appreciate that API by its very nature is a commoditized play and hencethe pressure was always on us to innovate to stay ahead of the curve in terms of growthwith profitability. We thus decided to discontinue certain molecules which whilecontributing significantly to our topline were harming both the environment and ourmargins. We also capped our exposure to certain other molecules that were more of arevenue game which did not fit in line with our long term aspirations. Had it not been forthese reasons we would have breached the Rs. 500 crores mark long ago.

Simultaneously we identified niche molecules in the API space which were the Rs. highvalue' added products and our focus has been to develop these molecules from laboratoryscale to large commercial quantities. This apart our investments in the custommanufacturing solutions (CMS or CRAMS) are now reaping the benefits of the seeds sown inthe distant past. We are seeing good traction in the CMS space and these are excitingtimes for us as we have managed to forge relationships with some of the leading innovatorand generic companies across US Europe and Japan.

The focus on niche molecules and CMS has definitely seen the margin profile improvingand we see a similar trend as we move forward with the base business continuing to provideus stability in terms of revenues.

Quality is the bedrock on which your Company has been built and I am delighted to statethat our Unit 2 and the R & D centre of our fellow subsidary were audited by the USFDAthis fiscal and were found to be in conformity with the highest standards of complianceand procedures. Your Company also entered into an agreement with the API Corporationduring the year to buy back the block at our Unit 2 which was specifically constructed forthem. This was done keeping in view the urgent need for increase in capacity given thegrowth targets in sight. Our business relationship with APIC continues to be intact and wesee this developing as and when opportunities arise.

It has indeed been a great journey for us in the last three years in terms of bringingabout a business transformation and while the whole Company has played a part in it Iwould like to highlight the role played by both Sucheth and Saharsh in executing thisstrategy. Recognizing this the Board has recommended that they be elevated from theirrespective roles to designations that better suit their current areas of influence.

Sucheth in addition to CEO and Whole time director will now also be Vice Chairmantaking care of the overall organization's functioning while Saharsh as Joint ManagingDirector will have the added role of R & D apart from his Sales Corporate Planningand Business Development roles. The three of us as the Executive Committee will beresponsible for charting the strategic direction of the Company. I hope that each of youwith your enthusiasm and participation continue to support us on this exciting journey.

Finally I would like to thank our customers partners suppliers regulatory agencieslenders and shareholders for their continued trust and support. I also acknowledge thecommitment passion and hard work that our management and other employees have beenputting in to ensure Neuland continues on its path to becoming the leading API supplier tothe pharmaceutical industry.

With Best Regards

Dr. D. R. Rao

Chairman & Managing Director