We have built a reliable pharmaceutical company that is managed by talentedprofessionals working to ensure sustainable long term growth. In recent months, we havechanged the dynamics of the Company with more facilities, increase in capacities andlarger number of products.
Geared well for the future
The financial year was a challenge and looking back, I am gratified that we did well.At the global level there was severe pressure on prices and heightened competitiveactivity. In the domestic market, high inflation and high cost of funds made it difficultfor our customers. While there was increasing demand for our products, the margins wereeroded. Taking a long term view, it is a matter of satisfaction that we saw improvementson several fronts, even if our bottom line did not keep pace with our emergingfundamentals.
During 2010-11, we saw very good traction in our volumes and products. Productionduring the year climbed by 36%; volume sold was higher by a similar 35.4% and the revenueswere higher by 31.9%. The challenge was in the cost of funds, which climbed by 55.8% toRs.165.03 million. Given the pressures in the market and our own need to fund our expandedoperations, we had to work hard to report a net profit of Rs.172.98 million.
We did several things right during the year to gear ourselves better for the yearsahead. We expanded our production capacities by almost 150% in our facilities and now lookforward to higher utilization in 2011-12. Our API manufacturing facility, the Unit 3 atJawaharlal Nehru Pharma City, was commissioned and trial batches have started. We havemoved up the scale and have commenced manufacturing value added API products at thisstate-of-the-art facility and are exploring new customer relationships.
We now have three facilities manufacturing demand-led products. The fourth unit atPydhibhimavaram, near Visakhapatnam purchased from the IFCI-led consortium of banks andinstitutions, will be activated after the necessary funds are tied up.
We have done a lot to reach this far. At Anu Labs, we have built a reliablepharmaceutical company that is managed by talented professionals working to ensuresustainable long term growth. In recent months, we have changed the dynamics of theCompany with more facilities, increased capacities and larger number of products. My teamand I are charged with charting the course, to translate our business strategy intochallenging but actionable plans. We have set several ambitious goals.
We shall challenge ourselves to raise the bar in product development, sharpencompetitiveness, gain market share, further expand facilities, improve manufacturingprocesses and quality parameters, meet regulatory and statutory requirements and protectintellectual property. Every move would always be an effort towards sustainable growth andincreasing the business cycle.
At the same time, we are aware that the external environment is difficult anduncertain. Nevertheless, we shall better our performance on the back of operationalimprovements. This is one reason why we are implementing our backward integrationprocesses, in phases. We would like to reduce our dependence on imported sources andminimize the variables in maintaining manufacturing schedules, improve our utilization andmanage the constraints.
We have interlocked all the moving parts and as we keep adding traction, the gains fromall units will synchronize with visible impact on our financials. We are working towardsreducing our debt and in fact, our Units 1 & 2 are already debt free. With increasingvolumes, our productivity would get enhanced through the year and help us to maintain ourmargins and EBITDA. Higher utilization with increased capacities is a matrix that wouldhelp us to become cash flow positive and cushion the start-up days at Unit 3.
My team and I are committed to improving the bottom line in 2011-12 as well as launchthe API products. Our performance results will be a function of our excellence in makingUnit 3 a key driver of value creation, both for our customers and our investors. We shallremain dedicated towards this mission.