Zandu Shareholders Hail Emami Entry

A group of investors from Zandu Pharmaceutical have questioned the propriety of Zandu management in declining management partnership to Emami Limited which has bought over about 24% in the former.

The investors, under the umbrella of All Gujarat Investor Protection Trust have wholeheartedly supported the Emami claim to the management partnership in Zandu.

In a communiqué to shareholders, Mr. Hemantsingh Jhala, Chairman of All Gujarat Investor Protection Trust, said the entry of Emami into the management would definitely bring the much needed fillip to Zandu and create value for the Zandu shareholders. Just the interest evinced by Emami, has more than doubled the prices of the Zandu stock thereby benefitting all the stakeholder as well as protecting the interests of the minority shareholders.

The communique explaining the stagnancy of the Zandu brand read.

The brand Zandu is more than 100 years old, but because of various reasons has not been able to sustain the growth that is required. The growth has not been outstanding by any standards, despite tremendous opportunities. In fact, Zandu’s is a typical case of missed opportunities.The financials of both the companies speak for themselves: 

 

 

Its stand alone sales of Zandu at Rs 136.98 crs for the year ended march 2008 have grown from Rs 108.67 crs in the last nine years at a CAGR of 2.61 %.  

Its EBIDTA has grown from Rs 15.10 crs to Rs 27.33 crs at a CAGR of 6.81%, while its net profit has grown from Rs 6.04 to Rs 16.41 crs at a CAGR of 11.75 %.  

The company has not launched any new product of significant value in the last 5 years.

Emami has been growing consistently at a CAGR of 20.62% over the last nine year from Rs 108 crs to Rs 583.71 crs, EBIDTA has grown at a CAGR of 25.68% from 12.61 crs to Rs 98.68 crs, which PAT has grown at a CAGR of 28.19% from Rs 9.92 crs to Rs 92.75 crs.

Zandu clearly needs a strong tonic to grow and Emami can represent that tonic.