The financial performance during the year gone by was very encouraging. Both domesticformulations business and Global exports (other than Russia-CIS) fared well and helpedachieve pro_table growth. The more focussed approach and investments made in thesebusinesses have yielded the positive result.
Total sales for FY 2018-19 at ? 1464.45 crores registered growth of 19.27% whiletotal income for the year at ? 1541.41 crores registered growth of 19.49%. Favourableproduct mix in both domestic business and Global exports along with depreciation of Rupeehelped improve operating pro_t. The earnings before interest depreciation and tax for theyear increased to 19.67% of sales from 16.57% in the previous year. Consequently theprofit after tax for the year at ? 182.06 crores was 42.23% higher.
At consolidated level too the performance improved with better performance of theoperating subsidiaries. Consolidated sales for the year at ? 1606.75 crores registeredgrowth of 15.93% while consolidated income for the year at ? 1684.64 crores was 16.17%higher over the previous year. Consolidated profit after tax at ? 193.46 crores was 39.85%higher over the previous year.
On the back of our initiatives and investments we continue to strive hard to deliverbetter performance. I shall now touch upon your Company's main businesses and theirperformance.
DOMESTIC FORMULATIONS BUSINESS
I am happy to share with you that domestic formulations business continued togrow at better than industry rate for _fth year in running. With sales of ? 622.54 croresthe domestic formulations business achieved growth of 14.5% against the industry growth of11% (IQVIA March 2019) while focus products registered growth of 22%. Creation of fourtherapy focussed divisions in this business supported by increase in size of the _eldforce and aggressive scienti_c promotion has helped achieve the growth. Thisdivisionalisation of team has helped place the right focus on the products leading toincrease in productivity. In addition the divisionalisation has helped create capacity toe_ciently handle more products in the future. Cilacar products group (calcium channelblocker) with sales of ? 199 crores registered growth of 27% while Rantac products group(anti-peptic ulcerant) with sales of ? 159 crores registered growth of 13%. The other keyproducts group viz. Metrogyl and Nicardia also continued to grow well. The Company isranked 34th in the domestic industry with Company's four brands viz. Rantac(anti-peptic ulcerant) Metrogyl (amoebicides) Cilacar (calcium channel blocker) andNicardia (calcium channel blocker) featuring in top 200 brands in unit terms while Rantacand Cilacar also feature in top 100 brands in value terms. During the year the Companylaunched six new products across cardiac gastro wound healing and probiotic segmentsall of which have performed well. During the current year the Company plans to launch sixmore new products across cardiac and GI segments.
In the short term the Company now plans to consolidate the business with selectiveadditions to _eld force as warranted for enhancing operations of any division andleverage the sales by regular introduction of new products.
The future outlook of the domestic formulations industry appears positive. The Companyhas aggressive strategy for this business and shall continue to make necessary investmentsin products people and processes to further accelerate the growth.
The contrast media products division also performed well. Sales in this business at ?52.09 crores achieved growth of 17%. During the year the Company launched next-generationMacrocylic MRI contrast agent and re-launched ultrasound contrast media De_nityTMmanufactured by a US company both of which contributed to growth and hold high potential.This business is fraught with severe price competition leading to erosion of margins.
During the year the overall exports of formulations amounted to ? 686.51 crores whichrepresents growth of 27.6% over the previous year.
Exports to Global markets at ? 484.88 crores registered growth of 21.8% in Rupee termsand 12.1% in US dollar terms over the previous year. Company's focus markets such as USSouth Africa and South-East Asia performed well. The sales to US at ? 179.22 croresregistered growth of 66.80%. US business and contract manufacturing business continue todo well. These are focussed business activities in formulations exports business and theCompany continues to accord high priority to them. During the year the Company receivedapproval for two ANDAs while we submitted two more ANDAs to US FDA for approval. Duringthe year US FDA carried out inspection of our solid oral dosage forms formulations andAPI manufacturing facility at Panoli Gujarat. The minor observations raised during theseinspections now stand closed.
Exports to Russia-CIS market at ? 114.47 crores were 24% higher over the previous yearafter removing the base effect. The Company continues to consider Russian market as highlypotential and is currently investing in new products for this market to grow the productsbasket. During the year the Company received a new product registration forPantoprazole 20 mg. tablets in Russia the commercial launch of which is in process. TheCompany plans to continue to pursue vigorous marketing initiatives in this market to buildstrong product basket.
We continue to contract manufacture and supply products to Cilag InternationalGmbH to whom we sold our Russia-CIS OTC business.
The Company's South African subsidiary Biotech Laboratories (Pty.) Ltd. registeredgood growth of 20.76% with sales at 331.97 million Rand and its profit after tax at 20.83million Rand registered growth of 38.51%. Despite a sluggish South African economy and avolatile Rand/Dollar exchange rate Biotech managed to increase sales. The private marketsector growth was 36% year-on-year while tender business growth was at 15% year-on-yearas the Government's overall purchases remained muted. Biotech's relationship with themajor retail pharmacy chains continues to grow and contributed to this success. Biotech'sbroad-based product basket good product pipeline and strong marketing skill o_er neededplatform for further growth. Company's Russian subsidiary registered growth of 10.64% insales at 626.46 million Rouble while its profit after tax at 19.18 million Rouble wasalso higher.
The sales in API business at ? 83.45 crores were 10% lower compared to the previousyear. Signi_cant part of this business comes from contract manufacturing arrangement. Thesales were lower mainly due to the Company's major customer's decision to source allDiclofenac salts from the Company in addition to Diclofenac Sodium for their formulationwhich has triggered new registration process. This process is expected to continue throughthe current year and consequently the current year sales will also be impacted. The salesare expected to improve once the registration process is over.
RESEARCH & DEVELOPMENT (R&D)
The R&D division continues to play an important role in Company's growth.R&D is currently focussed on the development of new formulations for US andRussian market commercialisation of new drug delivery systems and development of newAPIs. Our R&D has been playing an important role in the growth of exports.
BUY-BACK OF SHARES
With object to enhance shareholder value the Board authorised buy-back of up to3333333 equity shares of the Company @ ? 390 per share which received good responsefrom the shareholders. The Company thus bought back 3333333 equity shares of face valueof ? 2 @ ? 390 per share. This resulted in outgo close to ?130 crores excludingtransaction costs. The Company's outstanding paid-up equity shares thus stand reduced to80236642.
Like all businesses we also have challenges. For the domestic market sti_ competitionin the market place Government approach to drug pricing generic drugs and its stand on_xed dose combinations are some of the challenges that we face. For the internationalbusiness currency volatility and changing regulatory environment are the key challengesto name a few.
With focus on scaling up of domestic formulations business on one hand and growingGlobal business in US Australia South Africa and other key markets and lucrativecontract manufacturing business we are hopeful of good growth going forward.
I take this opportunity to thank members of the medical profession tradeinstitutions government & semi-government hospitals customers and shareholders fortheir continued trust and support. On behalf of the management of JBCPL I would also liketo thank all the employees of the Company for their deep commitment to achieving theCompany's objectives. I am con_dent that with this commitment and support yourCompany will continue to surge ahead.
|J.B. mody |
|Chairman & managing director |