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Bajaj Healthcare Ltd.

BSE: 539872 Sector: Health care
NSE: BAJAJHCARE ISIN Code: INE411U01027
BSE 00:00 | 06 Jul 278.80 1.55
(0.56%)
OPEN

278.40

HIGH

280.80

LOW

275.70

NSE 00:00 | 06 Jul 278.75 1.55
(0.56%)
OPEN

278.00

HIGH

280.20

LOW

275.60

OPEN 278.40
PREVIOUS CLOSE 277.25
VOLUME 2105
52-Week high 511.90
52-Week low 256.80
P/E 10.78
Mkt Cap.(Rs cr) 769
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 278.40
CLOSE 277.25
VOLUME 2105
52-Week high 511.90
52-Week low 256.80
P/E 10.78
Mkt Cap.(Rs cr) 769
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bajaj Healthcare Ltd. (BAJAJHCARE) - Chairman Speech

Company chairman speech

DEAR SHAREHOLDERS

t's been a year like no other as I sit down to write this year's message the onlything that crosses my mind is that how challenging the year has been for most of us.During the year we not only witnessed human resistance put to test it also challengedbusinesses like never before pushed them to the edge of their resilience andcapabilities. At the outset I trust you and your family are keeping well in theseunprecedented times. FY21 will be remembered as one of the most challenging years inrecent times as COVID-19 continues to affect our lives and livelihoods.

Taking a long-term view I found it quite inspiring to see the way we performed duringthe year in delivering on our key strategic objectives and recording strong growthnumbers amidst a challenging market environment. Thus I find myself vindicated of thetrust and confidence I had put in my colleagues over the years but especially over thepast year when we were put to yet another test of resilience as the raging pandemiccontinued to wreak havoc in people's lives and countries' economies. We entered FY21 in astrong position on the back of a strong balance sheet owing to the successful execution ofour strategies.

Macro and micro economic overview

A year of unprecedented challenges and uncertainties FY21 proved to be a difficultyear for most business entities across industries. The COVID-19 pandemic disrupted the wayof life businesses and the overall economic scenario across the globe. It had putgovernments under pressure to act with agility and stem the spread of the virus. Everycountry had its set of problems and adopted strict containment measures includingnationwide lockdown. Output in the US contracted 3.4% and that in the Euro area by 7.2% in2021. An already weak Indian economy saw GDP declining by 24.4% multiple decades low inthe first quarter of the financial year under review.

The pharmaceutical industry also suffered due to COVID despite being at the center ofattraction. Although the pharma industry attracted a lot of attraction and newinvestments during this period the majority of the focus across the pharmaceuticalindustry was channelized towards the COVID-19 related drug and vaccine discovery. Furthersupply chain issues and limited availability of labour also added to the problems faced bythe industry.

Our performance in FY21

FY21 proved to be an eventful year for BHL as we not only surpassed our last year'sperformance but recorded the highest growth numbers in the history of the Company.Further our performance this year is evidence of BHL's resilience and commitment todriving disciplined growth. During the year we not only recorded strong growth but alsoensured that we took the necessary steps that helps us sustain the growth momentum in theyears ahead. The Company also undertook concerted efforts to overcome the challenges posedby the COVID-19 pandemic. It enabled us to improve turnover obtain profits secure neworders and reduce debt despite an adverse business environment and pressure of risingprices of raw materials.

BHL delivered FY21 financial performance ahead of expectations with a total revenuefrom operation of '65698.38 lakhs an increase of 60.24% versus the previous year drivenby a strong performance of our products across the board.

We recorded a operating profit of '14323.98 lakhs an increase of 162% and a PBT of'11881.97 lakhs increase of 229.50% reflecting a higher demand for our products andbetter realisations from the key products of our portfolio. Our net profit for the yearstood at '8310.89 lakhs compared to '2523.67 lakhs in FY20 an absolute growth of 3.3x.We also continued to maintain healthy margins with EBITDA margin at 21.58% and PAT marginat 12.52% during the year under review. Our heightened focus on strategically expandingour portfolio growing our presence in the high value segment and optimising capitalemployed along with cash flow focused working capital management has helped us to reach aposition of financial strength. We approach FY21 with a robust balance sheet as our fixedassets grew by 28.28% to '20812.77 lakhs as on 31st March 2021 with a RoCE and RoE of37.05% and 32.08%.

We strengthened our RoCE and RoE by 1635 bps and 1800 bps respectively. We havemaintained a healthy and well-diversified book of '52563 lakhs at the end of 31st March2021.

Strengthening our foundations

Our ability to report such strong numbers and to take a long-term view of our businessand strategy is underpinned by our business model and financial strength.

Last year we have been successful in fortifying our API and FDF business with theintroduction of five new products. This helped us drive our ambitious strategic plan tosustain long-term top-line growth of the business whilst driving attractive margin andreturns. Undoubtedly COVID-19 has brought in a level of uncertainty with respect to thenear-term outlook however the BHL's plans remain unchanged reflecting our confidence inthe long-term opportunity. Further the acquisition of 3 API Manufacturing Units 1Engineering unit and 9 Acres open plot at Dahej GIDC at a capital outlay of ' 6100 lakhswas a major highlight during the year. Yes they are stressed companies but thevalue-addition these two companies are expected to do to our portfolio is immense.Certainly we are confident that over time this inorganic growth strategy of ours whichwe had undertaken over the last few years will increase our capacity for innovation andnew product development support the creation of a more growth focused business model andportfolio all of which are central to sustaining growth.

Progressing toward our strategic goals

We aim to deliver consistent durable growth and performance in a responsible way.Despite the disruption of COVID-19 the fundamentals of our business remain strong and themedium-and long-term prospects of our markets attractive. As a result we continue toinvest across the business from strategic acquisitions to strengthen our portfolio toinvest in research to develop the off-patented products at a competitive price to allowus to capitalize on our platform and competitive strengths and seize more of the marketopportunities for growth and expect the operational leverage to unwind as the value of ourinvestments are realized post-COVID-19.We will continue to strengthen our position as thepartner of choice for our customers and partners sustaining our growth.

Sustaining our focus on research and development

Our growth strategy starts with our commitment to build our capabilities in researchand development. We pursue this outcome by listening to our customers'needs and bycontinuously focusing on innovating and improving our processes to provide our clientswith the desired outcome. Our client'success depends on rigorous product performance andreliability and it's these factors that influence our research and development. Wedeveloped and introduced eight APIs and Formulations such as Favijaj (Favipiravir) Ivejaj(Ivermectin) Posajaj (Posaconazole) Flydroxychloroquine Sulphate MethyldopaDeferasirox Acyclovir and Vildagliptin. Favijaj (Favipiravir) Ivejaj (Ivermectin) andPosajaj (Posaconazole) have played a key role in the nation's fight against COVID-19.

This has been made possible by our sustained investment in R&D. As a companycommitted to R&D we invested ?456.74 lakhs in different R&D activities duringFY21 an increase of 90% compared to FY20 and 5.50% of our net profit. We have a clearresearch strategy in place to maintain our core API and formulation position deliver onthe development complex APIs and FDFs at competitive price and build out ourgrowth-focused portfolio.

Expanding our presence

Our growth strategy is to successfully expand our offering to provide our customerswith additional solutions and further grow within our addressable markets. Our focus is onbroadening our proprietary API product offering into complementary intermediates and FDFsegment; extend our presence in the high value segment; and offering our capabilities tobe a leading formulations developer partner for big pharma clients. We achieved progresstoward each of these objectives during the year.

Further we successfully integrated the business of recently acquired Vet Pharmamanufacturing facilities with ours during the year. Thus when combined with our own APImanufacturing strengths has positioned us well to serve the growing need for APIintermediates and Formulation solutions for our clients. Further we focused on building adomestic market for our proprietary APIs such as Citicoline Sodium TicagrelorTheobromine and Ascorbic Acid. We also continued to develop and grow demand for our APIsolutions such as Vildagliptin Sitagliptin Deferasirox Chlorhexidine GluconateFosfomycin Theobromine and Octenidine Hydrochloride in the international markets therebyenhancing our global presence. Overall these efforts meant that despite customerdisruption due to COVID-19 we delivered ahead of our commercial plan across these newproduct lines for the year.

Building organisational scalability

Our strategy for sustained growth is to build scalability into our operationalinfrastructure to allow us to deliver on our growth plans increase efficiency and sustainvalue creation. During the year we deployed new machineries and adopted new technologiesto increase our throughput and reduce development cycle time. Further the acquisitions ofnew facilities during the year also helped to enhance our overall manufacturingcapabilities. These strategic acquisitions are in line with the Company's business growthstrategy to support increased customer demand whilst reducing costs and improving deliveryspeed.

We have also identified and started addressing key bottleneck constraints during theyear across our recently acquired assets operations and product workflows.

Enhancing our people strength

We remain highly dependent on the talent innovation and creativity of our employees.They have not compromised on quality compliance and execution of our strategy despitemany of them working from home since March 2020. At BHL I am proud of the way our peoplehave managed during the COVID-19 pandemic and I would like to thank each one of them fortheir hard work and continued commitment.

To build on our culture be a great place to work and embrace inclusivity throughoutall levels of the organisation we have updated key employee policies to ensure they areconsistent with BHL's values and support its long-term sustainability.

Being a responsible business entity

A resolute business is crucial to both our operations and our strategic objective. Weresolutely concentrated on laying the foundations of a purposeful business withshareholders society and the environment as essential elements. Since the establishmentof BHL responsible behaviour has been core to everything we have done - from offeringhealthcare to the local community to most recently going out into the community in Indiato help deal with the health crisis. As responsible corporate citizens we diligentlyfocused on continuing to extend all forms of support to COVID-19 relief efforts. In a yearof turmoil we are proud and humbled to have been able to serve our communities.

Road Ahead

Time and again at BHL we have demonstrated our resilience and stood tall against allodds.

Despite uncertainties ahead especially after the second wave of COVID-19 has causedconsiderable damage to human health we remain confident about accomplishing our goals.

As we continue to build our presence in India and abroad relying on our inorganicgrowth strategies we are optimistic about increasing our operational efficiency andsustain our top and bottomline growth.

Before I conclude I would like to express my heartfelt gratitude to our shareholdersbusiness partners customers and other stakeholders for their continued trust and supportin our abilities to drive the organization forward. I remain thankful to everyone in theorganization for their innovative capabilities and tremendous enthusiasm to tide throughdifficult times.

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