We are focused on our strategy of maintaining a de-risked businessmodel and being closer to the customer with integrated operations and leadership in keyproducts.
Dear Fellow Shareholders
The Company reported strong financial performance in FY 2019 withrecord sales and profitability driven by robust growth in the Pharmaceuticals segment. Ourstrategic focus on de-risked business model and being closer to the customer withleadership in key products and our global competitive edge due to vertical integrationdrives our continued strong performance. As per the International Monetary Fund (IMF) theglobal economy is expected to grow at 3.2% and 3.5% in 2019 and 2020. Key economies suchas the US European Union (EU) and China are expected to witness slowdown in growth in2019 which has resulted in governments and centrals banks of these economies to adoptstimulus measures along with accommodative monetary policies to support economic growth.
On the other hand India is the fastest growing major economy in theworld for the second consecutive year. IMF expects India's GDP growth in FY 2020 andFY 2021 at 7.0% and 7.2% respectively.
The global pharmaceuticals market is expected to grow at 6.4% CompoundAnnual Growth Rate (CAGR) between 2018-2024 to reach US$ 1.2 trillion in 2024. This growthis expected to be driven by novel therapies addressing key unmet needs growth in coretherapeutic areas and increase in access to medicines globally. The Indian pharmaceuticalmarket is the third largest in the global pharmaceutical industry in terms of volume andthe largest exporter of generic drugs in the world accounting for about 20% of the globalgeneric drug exports. India is also the second largest contributor of global biotech andpharmaceutical workforce and labor costs here are lower than other manufacturing hubs.India also has the second highest number of USFDA approved facilities outside the US.
We are an integrated global pharmaceutical and life sciences Companypresent across the entire pharmaceutical value chain. We take pride in our positioning asone-stop-shop in the global pharmaceutical and life sciences industry supplyingproducts and services to customers in over 100 countries. Our diversified businesses aresegmented in three major verticals namely Pharmaceuticals' Life ScienceIngredients' and Others' (Drug Discovery and Development Solutions andIndia Branded Pharmaceuticals). We are globally recognised as a Partner ofChoice' by leading pharmaceuticals and life sciences companies. Our strength lies inthe unique offerings of pharmaceutical and life sciences products and services especiallyin Specialty Products. We are engaged in continuous improvement of products and processesto enhance quality and cost competitiveness in order to build value for our customers. Asa responsible corporate citizen we are committed to safeguarding the environment andmaintaining a triple bottom line approach of sustainability through delivering a highsocial environmental and economic performance. The Pharmaceuticals segment is engaged inmanufacture and supply of Radiopharmaceuticals Allergy Therapy Products ActivePharmaceutical Iingrediets (APIs) Solid Dosage Formulations and in the ContractManufacturing of Sterile and Non-Sterile products through six USFDA approved facilities inthe US Canada and India. We have created several competencies in the segment thatincludes an innovative product portfolio in specialty pharmaceuticals with high entrybarriers and limited competition with strong R&D capabilities global competitive edgedue to low cost from vertically integrated operations market leadership in keyproducts and business segments de-risked business model with low concentrationrisk and a consistent track record of regulatory approvals. The differentiated businessmodel focusing on specialty pharmaceuticals enables us to deliver robust results and builda strong base for future growth in our Pharmaceuticals segment. The Life ScienceIngredients segment is engaged in Specialty Intermediates Nutritional Products and LifeScience Chemicals through five manufacturing facilities in India. This segment offers abroad portfolio of high quality ingredients that find application in wide range ofindustries. In this segment our strength lies in our integrated business model strongcapabilities in chemistry low cost of manufacturing through best in class processes andleadership position in key products on a global level.
The Others' segment includes the Drug Discovery &Development Solutions and India Branded Pharmaceuticals businesses. The Drug Discovery andDevelopment Solutions business provides proprietary in-house innovation for out-licensingpurposes and collaborative research and partnership for Drug Discovery through twoworld class research centers in India. The India Branded Pharmaceuticals is a formulationsbusiness that caters to the Indian market.
The Company continued with its strong performance in FY 2019 andregistered record revenue and profitability during the year on the back of growth in thePharmaceuticals segment. Total Revenue from Operations was the highest ever at र91108 million up 21% Year-on-Year (YoY) with International revenue at र66702 million contributing 73% of the total revenue. Pharmaceuticals revenues were atर 53240 million up 33% YoY and contributing 58% to the revenues. As emphasisedearlier this growth is a testimony to our strategy and the business model wherein we havebeen able to build multiple levers of exciting and differentiated businesses which havehelped the Company deliver robust performance. During the year our Solid DosageFormulations facility at Roorkee received a Warning Letter and the APIs facility atNanjangud received an O_cial Action Indicated (OAI) classification from the USFDA due tocGMP related observations. We are committed to maintain high compliance levels and areengaging with the USFDA to address their concerns and take corrective actions. We do notexpect these events to have an impact on the current revenues from these facilities;however approvals of any new applications from our Roorkee or Nanjangud facilities maybedelayed.
Life Science Ingredients (LSI) revenue stood at र 35452 millionup 5% YoY and contributed 39% to the revenue. 'Others' segment's revenue improved 24%YoY to र 2416 million contributing 3% of the revenue. Earnings before Interest TaxDepreciation and Amortisation (EBITDA) was 14% higher YoY at record र 17747 millionwith a margin of 19%. This was led by the Pharmaceuticals segment which reported EBITDAof र 13858 million a growth of 38% YoY with a margin of 26%. The Pharmaceuticalssegment now contributes over 75% to the overall EBITDA.
Life Science Ingredients reported EBITDA of र 4451 milliontranslating to EBITDA margin of 13%. Others' segment EBITDA was at र 43million translating to EBITDA margin of 2%. Depreciation and amortisation in FY 2019 wasat र 3709 million as compared to र 4150 million in FY 2018. Finance cost stoodat र 2198 million vs. `2843 million last year.
Profit After Tax stood at र 5745 million YoY with an Earning PerShare (EPS) of र 36.86. During the year Jubilant Pharma Limited (JPL) Singapore amaterial wholly owned subsidiary of the Company fully redeemed the outstanding zero couponconvertible loan of International Finance Corporation (IFC) Washington on a one-timesettlement of US$ 135 million based on mutual agreement. With this all loans outstandingto IFC have been fully paid and the obligation to provide an exit to IFC by equityconversion of the convertible loan has been cancelled. This payment was made from therated unsecured bonds of US$ 200 million raised by JPL Singapore in March 2019.
In addition Jubilant Life Sciences Limited (JLL) also raised र3500 million through non-convertible debentures during the year. The net proceeds of thefunds raised have primarily been used to refinance the existing debt of the Company.
The Board has proposed a dividend of 450% per equity share of_र 1face value for the year which will result in a cash outgo of_र 864 million includingtax.
The Company continues to work on its strategic focus on being closer tothe customer and on further strengthening of its leadership position in definedbusinesses. We expect stable performance in FY 2020. The Pharmaceuticals segment isexpected to continue to deliver steady revenues and rangebound margins. In the LSIsegment growth will be led by Nutrition and Specialty Intermediates businesses. TheCompany is focusing on generating operating cash to invest in building an R&D ledproduct pipeline particularly in Specialty Pharmaceuticals business and on strengtheningof its balance sheet by reducing debt to ensure sustainable growth.
We take this opportunity to welcome Mr. Arun Seth and Mr. Anant Pandeon our Board. We would like to thank all our valued stakeholders including our customersvendors bankers and shareholders for continuing their support and upholding theirconfidence and trust in us. We remain deeply grateful to all our employees globally fortheir contribution and commitment towards this organisation.
|Wishing you the best for the year ahead. || |
|Shyam S Bhartia ||Hari S Bhartia |
|Chairman ||Co-Chairman and |
| ||Managing Director |