New Managing Director Rajaram Narayanan has taken over from Manish Gupta.
Revenues from API during the quarter were ₹127.3 Cr which is the highest quarterly API revenue ever. On a full year basis, API revenues were ₹431.4 Cr (5.5% decline YoY).
They commercialized 3 new products and completed 1 VMF filing. They now have a total of 24 VMF filings and 11 CEP approvals.
The capacity expansion at the Germany facility has resumed post covid related delays.
Revenue from formulations business was ₹256.4 Cr for the quarter and ₹981.4 Cr for the full year. There was an 8.4% growth in formulations business overall and 13.5% growth on a constant currency basis. The growth in the formulation business was due to strong performance in high growth markets of Brazil and India.
They completed the acquisition of Nourrie in Brazil during the year which provides them with a portfolio of 23 commercialized products and a pipeline of 17 products for the pet and swine segment.
Their plan to use Turkey as a manufacturing and export hub is still proceeding despite a difficult macroeconomic environment.
They are still facing cost pressures for raw materials, logistics and utilities.
They raised debt to consolidate the minority stake in Brazil and to fund the Nourrie acquisition.
The India formulation business consists of products they manufacture themselves and products they distribute of a large animal health company.
They distribute formulations themselves in markets like Spain, Brazil and Turkey where they have large manufacturing units and they work with distributors in the other markets.
They are able to pass on the increase in costs in the formulations business with a lag. They are not passing on the entire increase though, as they do not want to lose market share.
About 60-70% of the API business is based on long term contracts. They are able to negotiate price increases once the contracts have ended. In their spot business, they have to be more careful based on what the competition is doing.
Much of the branded generics in the animal health business are sold through large distributors who serve the farming institutions. They tend to have a preference for branded generics which are lower in price.
They are mostly a generic player in the formulations space and they are in the process of transitioning to a branded generics player.
They are in talks with various vaccine manufacturers to see if they can partner with them to sell vaccines in India. But the registration for vaccines takes a very long time, so revenues from that are not expected anytime soon.
While they have a presence in Spain, the other large markets in Europe like Germany, UK, Italy, etc, are still untapped. They are also trying to grow in the US market through specialty generics.
Revenues from the large API supply contract is expected to start coming in towards the end of FY23. They will see the majority of the realizations from that contract in FY24.