Expanding Our Horizon
Dear Stakeholders
I am pleased to present our annual report for FY 2021-22 at a timewhen the worst of the pandemic is behind us. As a society we showed remarkable fortitudewith the pharmaceutical industry playing a key role in overcoming the challenges. The lasttwo years have taught us to sharpen our vision and work towards becoming a responsiblebusiness and creating consistent value for our stakeholders.
FY 2021-22 was indeed a challenging year. The uncertainties attached tothe pandemic supply-chain disruptions and the aggravating impacts of the Russia-Ukraineconflict have created uncertainty in the business environment. Despite these challengesat IOL we managed to consolidate our business and our focus remains on providing qualityproducts through continuous innovation and facilitating value creation for ourstakeholders.
Industry Overview
The Indian pharmaceutical space remains an essential market for theworld and is expected to be an important part of India's growth story goingforward. According to the Economic Survey of India 2022 the industry is expected tobecome thrice its present size by 2030. The growth is driven by India's comparativeadvantage in cost regulatory compliance of Indian firms and a business-friendly policylandscape. A promising piece of evidence for this anticipated growth is the rise in FDIinflows in recent years as the cumulative FDI equity flows have increased by $3.6 billionover the last five years. Regarding exports India is the largest provider of genericdrugs globally. For example the Indian pharmaceutical sector supplies 50% of the vaccinedemand 40% of the generic demand and 25% of the medicine to the UK.
India's chemical industry is extremely diverse covering more than80000 commercial products making it an attractive hub for global chemical companies.Within the Indian chemical industry Specialty Chemicals constitute 22% of the totalchemical market. The Indian Specialty market is expected to grow and surpass its Chinesecounterparts by doubling its share of the global market to 6% by 2026. This growth isexpected to be driven by strong tailwinds in exports and demand recovery in the domesticmarket. A common megatrend in both the Indian pharmaceutical and chemical industries isthe shifting of supply chains of raw materials from China to India as part of the China+1strategy of global companies. Recurrent COVID-19 lockdowns increase in environmentalregulation and geopolitical tensions have significantly increased the risk of operatingin China for global companies. As a result global companies have started to decreasetheir dependency on a single entity and diversify their sources. India offers strongalternatives to China with comparable scale technology raw materials and a favourablepolicy environment. As a result the Indian pharmaceutical and chemical industries arewell-positioned to be on a high growth trajectory.
FY 2021-22 in Perspective
Despite the strong headwinds our financial performance for FY 2021-22was mixed however there were telling signs of future growth. We recorded the highestrevenue of 2216 crores with revenue growth of 11% this year. We have raised no debtssince 2017 which gives us the room to add new products to the pipeline and increase ourcapacity consistently. Our efforts towards diversifying our product portfolio by addingnew products to both our API and Specialty Chemicals portfolio have been successful with ashift of revenue generated from Ibuprofen to both Specialty Chemicals and other APIs. OurCompany has a good return on equity (ROE) track record and for the last three years wehave recorded an average ROE of 31%. We were able to consolidate our financial performancedespite disruptions in supply chains price volatility and inflation. I am pleased toannounce that we continue to remain debt-free and our key ratios put us in a favourableposition for the future.
Taking Advantage of Opportunities
At IOL we consider research and development as the foundation of ourconsistent growth. We have been investing in R&D and product innovation to increaseour in-house capacity for product development. We have also increased our marketpenetration and added value to our export arena by filling four DMFs with USFDA and threeCEP applications with EQDM. We were able to get approvals from the Korean FDA for twoproducts and Russian regulatory authorities for six products. I am proud to convey thatthe Company has also filed for three patent applications in FY 2021- 22.
Taking advantage of the opportunities presented before us we haveincreased our Specialty Chemicals and other APIs manufacturing capability by establishingnew manufacturing units. In the past two years we have added 4 new units to ourmanufacturing facility located in Barnala Punjab totalling our functioning manufacturingunits to 10.
Commitment to Sustainability
We value our workforce and recognize their role in paving the way forour Company to be recognized as a leader in our sector. Creating a safe inclusive anddiverse workplace is fundamental to motivate our employees to give their best. Empoweringthe communities we work with is integral to our Company's purpose and values. Weextend support to the underprivileged sections of society through CSR activities focusedon ensuring quality health access to education and social upliftment. We have impacted+100000 beneficiaries in FY 2021-22.
We are also upgrading our sustainability strategies by setting upfuture targets and goals and aligning with global frameworks including GRI CDP andBusiness Responsibility and Sustainability Report (BRSR) in the coming fiscal year.
Moving Forward
We are looking forward to continuing our growth journey bystrengthening our capabilities and working towards our targets. The pandemic anddisturbing global political scenario did test our limits but we have withstood thechallenges and performed remarkably. We are positive about achieving better revenue andEBITDA growth while operating responsibly in partnership with all our stakeholders. Wepromise to stay true to our purpose of creating value for our stakeholders throughproactive leadership a robust governance framework and credible performance I wouldlike to extend my heartfelt gratitude to all my stakeholders for their unconditional trustand support.
