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Fermenta Biotech Ltd.

BSE: 506414 Sector: Health care
NSE: N.A. ISIN Code: INE225B01021
BSE 00:00 | 22 Apr 332.55 26.65
(8.71%)
OPEN

319.90

HIGH

341.00

LOW

313.30

NSE 05:30 | 01 Jan Fermenta Biotech Ltd
OPEN 319.90
PREVIOUS CLOSE 305.90
VOLUME 257835
52-Week high 442.00
52-Week low 218.00
P/E 19.77
Mkt Cap.(Rs cr) 979
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 319.90
CLOSE 305.90
VOLUME 257835
52-Week high 442.00
52-Week low 218.00
P/E 19.77
Mkt Cap.(Rs cr) 979
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Fermenta Biotech Ltd. (FERMENTABIOTEC) - Chairman Speech

Company chairman speech

How we are building a future-ready Company

It is that time in the existence of humankind when one needs to extend beyond theoperational review of a specific financial year and appraise the big picture.

There has possibly been no more relevant time in the recent history of humankind wherethere has been such an emphasis on the need for enhanced immunity. The impact of COVID-19has brought into play the need for improved health and wellbeing. Besides in a worldmarked by sedentary lives and poor nutrition there is a premium on the need for healthsupplements. This is where ‘nutraceuticalisation' comes in. We believe that a largernumber of processed food and well-being products will be fortified with nutritionalingredients. A large number of these products will be woven around Vitamin D which isincreasingly necessary because of most people prefer to spend their time indoors with lowaccess to sunlight.

Through the manufacture and research of Vitamin D across the last five decadesFermenta has been engaged in precisely this space.

Through a long-standing focus Fermenta is the only manufacturer of Vitamin D3 in Indiaand among the largest in the world. The combination of scale brand researchrelationships and relevance indicates that we are at the cusp of a significant multi-yearopportunity.

Our objective is not just to service an existing market; it is also to grow it. Weexpect to enhance nutrition affordability and strengthen our recall as a B2B solutionprovider and nutritional supermarket.

At Fermenta we are attractively placed to make this happen. Over the decades Fermentahas been playing the role of an evangelist in the Vitamin D space as a manufacturer thatcaters to customers worldwide.

This overarching role has been driven by our forward-looking investments in research.We invested disproportionately in research despite market weakness. We made sustainedmulti-year research investments. We commissioned a full-fledged research centre. Wefocused on the development of new grades entry into adjacent spaces quality improvementand cost moderation.

At Fermenta we extended beyond research to the responsible manufacture of products andgrades needed by our customers; we invested in manufacturing infrastructure audited bydemanding global regulatory agencies; we benchmarked our infrastructure in line withevolving compliances designed to exceed regulatory standards; we invested in cutting-edgetechnologies and state-of-the-art equipment; we extended to adjacent value-added segmentsby bringing in value-added variants.

At Fermenta we raised our benchmarks in line with the best in the world. We generatedsuperior production efficiencies shrank our learning curve sweated assets betterenhanced product purity and strengthened operational safety. The result is that we are notonly among the largest Vitamin D providers in the world and among the most competitive; weare also considered among the most dependable when it comes to product service andsafety. The result is reflected in our multi-decade engagements with customers making usintegral to their growth and success.

At Fermenta we will grow our manufacturing capacity through investments that couldenhance our proximity to customers across the world shrink delivery turnarounds andstrengthen our global positioning. The addressable headroom is vast in our business: newVitamin D3 applications are being developed while the number of players is not increasingas the industry continues to be protected by a high technology entry barrier. Dietarysources contribute only a small amount of Vitamin D in countries like India marked by alow fortification of foods. The irony is that despite abundant sunlight a large sectionof the Indian population (~90%) suffers from low Vitamin D levels.

Further the global animal feed market presents a multi-year opportunity. We havealready shifted the needle: In FY 2016-17 animal feed accounted for around 44% of theVitamin D3 revenues whereas this increased to 56% in FY 2019-20. We have seen a CAGRvolume growth of 15% from FY 2014-15 to FY 2019-20 in Human Vitamin D3 and 10% in AnimalVitamin D3. During the same period we have seen a CAGR in value of 20% in Human VitaminD3 and 23% in Animal Vitamin D3. Besides the Company is positioning itself as adependable supplier of quality products with excellence in service delivery offering asuperior price-value proposition.

In view of this large opportunity the Company strengthened its Balance Sheet duringthe last financial year through a merger of its parent Company with the objective toreduce costs and enhance synergy. Each Company will get access to the assets and cash ofeach other; the increased availability of resources now provides us with a potentialwar-chest with which to grow the business in an organic and inorganic manner across theforeseeable future. As an extension of the right-sizing of our Balance Sheet andmonetisable assets our credit rating strengthened from BBB to A- (long-term debt).

Some of the potential is already being translated into reality: even as we increasedour manufacturing capacity in 2019 we plan to increase the production capacity bycommencing operations at Sayakha in the near future broad-basing our manufacturingfoundation with a multi-year perspective. We believe that this sustained investment acrossmarket cycles moderates the premium in timing our investments in line with marketdevelopments.

We believe that the consumer mindset manufacturing infrastructure as well as researchcum product development have made us growth-ready.

The time has come for Fermenta to deliver.

Mr. Sanjay Buch
Chairman

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