Business Standard

Competition hits Shree Baidyanath Ayurved margin


Press Trust of India Kolkata
Ayurvedic over the counter medicine and products maker Shree Baidyanath Ayurved is facing squeeze in margin on account of intense competition in the sector.
EBITDA margins of the 100-year-old company had declined by 220 basis points in two years. The FY'19 margin squeezed to 3.2 per cent (provisional) in FY'19 from 5.4 per cent in FY'17.
India Rating (Ind-Ra) has also downgraded its rating on account of these developments, though sales had expanded by 9.4 per cent to Rs 536 crore.
The downgrade in working capital limits reflects weaker-than-expected operating performance in FY'19 on account of intense competition in the ayurvedic medicine industry, which is likely to keep profitability under pressure in FY20- FY21, Ind-Ra said in a note.
Baidyanath faces stiff competition from organised and unorganised players in the Ayurvedic medicine market, where entry barriers are low, the rating agency said.
The company does not have any term debt obligations and capex plans over the medium term.
The company's working capital cycle, which was four- to-five months over FY17-FY19, is likely to remain at the same level in the medium term, Ind-Ra said.
Baidyanath has five branches - one each in Nagpur, Kolkata, Jhansi, Patna and Allahabad. All the branches operate as individual strategic business units (SBUs) with separate management and departments.

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First Published: Oct 28 2019 | 7:15 PM IST

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