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Amrutanjan Health Care
BSE: 590006|NSE: AMRUTANJAN|ISIN: INE098F01023|SECTOR: Pharmaceuticals
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« Mar 13
Chairman's Speech (Amrutanjan Health Care) Year : Mar '14
Dear Valued Stakeholders,
 
 This space is an opportunity for me to share the vision for the company
 and also touch upon what has transpired the year in review.
 
 2013-14 was a year of bouncing back after zero growth last year. Our
 core OTC business saw volume and value growth and this combined with
 improving material costs and expenditure control, let to a margin
 expansions in both Gross and Operating levels. We foresee this trend to
 continue into the future. Our gross sales grew from Rs. 121 crores to
 Rs. 130 crores. The overall volume growth was around 6% and the Gross
 margins improved by 2.5 points, to 58.5% from 55.8%. We foresee Gross
 margins to get back to the 60% level in 2014-15 year , which is a level
 that we last saw in 2009. The factors that contributed to sales growth
 were
 
 * Double digit growth in west and East Zones
 
 * Launch of Body Roll on in the later part of the year
 
 * Expansion of distribution to tier 2 and 3 towns in Maharashtra and
 Karnataka
 
 * Growth in small packs in small towns
 
 * Growth in other products like Decorn corn caps and sanitary napkins
 
 * Growth in large value packs in metros
 
 As mentioned in the last few Annual Reports, we are very clear on our
 strategy going forward: Focus on Head , Body and Congestion areas for
 our core business and offer/build portfolios in each vertical. We wish
 to also expand on our smaller portfolio of other products like Sanitary
 napkins and foot care products(corn caps) that can grow by entering the
 distribution chain and reaching consumers. Once they individually reach
 a level of sales that is self sustaining brand investments can happen.
 We have other unique OTC products that will be entering the market
 space this year.
 
 We also have various formats like sprays and roll ons in addition to
 balms. Our overall Roll on Format stands at more than 10% of sales
 which in 2009 was only 4%. We are also growing in the Modern Trade
 format and this channel contributes to 5% of total sales. This was at
 3% of total sales in 2009. This is a strategic interest for us as it
 lends to showcasing our range of products on one shelf hereby building
 awareness of the entire portfolio. We are also expanding into overseas
 market which should add to our growth targets.
 
 The challenges for a company our size is to match the investments in
 media attempted by our much larger competitors. We have to recognize
 that our nearest competitor is 10 times our size and two of the smaller
 brands have sold out to larger competitors in the last 5 years. This
 was a very dormant category till 2009! Inspite of these head winds we
 executed to sustain in this business. This industry is driven by
 investments in the brand and this is a fact.  Share of Voice and Share
 of Market are correlated strongly. We wish to steadily increase our
 share of voice to a level that will help us build new brands, and
 sustain existing ones. We do not wish to do so by TV alone. For
 instance, we started a sampling drive for our Roll on that reaches
 lakhs of consumers a year. Some of this is funded via operating
 efficiency drives: removing excess packaging material, inventory
 management, use of common sales force to market both OTC and Beverages
 and much more.
 
 We wish to grow the next 3-5 years at a CAGR of 33%. This is bold. But
 looking at the past, one can argue we are trending in the right
 direction.
 
 2000-2005: 0% 2005-2009: 5% 2010-2013: 10%
 
 Growth is a process. It requires the right mix of ingredients: culture,
 people and execution.
 
 We have built the foundation for higher growth due to implementation of
 a improved execution culture: be it system development in sales and
 distribution(in 2009-10) or a better human resource development program
 that grooms internal leaders: Today, half of all leaders who have taken
 new sales or functional assignments are internal hires. Going forward,
 human resource development would dictate the probability of us
 achieving our goals. This is a challenge for smaller companies as they
 struggle to attract talent. This does not mean we do not infuse new
 blood and new ideas into the management team. We have an efficient
 blend of new and existing talent in the company that promotes diversity
 of thought and action.
 
 Our Beverage business under the brand Fruitnik dropped by 30% largely
 due to a 10% drop in overall category sales and delayed execution of
 expansion into newer states. As this report is being printed, our
 business has expanded into all the southern states (barring Kerala) and
 Orissa. Plans are under way to enter West Bengal, UP and Maharashtra by
 end of the year. We have already added 189 distributors and 169 towns
 since last fiscal in these states.  Our vision for this business is two
 fold: Grow the generic fruit drink business into all the states where
 OTC business is thriving and launch new value added categories like
 health and wellness drinks in metros and tier 2 towns.
 
 Our Pain Services business saw a growth from Rs. 99 lakhs to Rs. 132
 lakhs in sales. We have 2 centers in Chennai and wish to expand more
 centers. The challenges here are getting Insurance to cover Pain
 Service. Once that is offered, we feel the footfalls and revenue will
 improve drastically.
 
 Sincerely,
 S. Sambhu Prasad
Source : Dion Global Solutions Limited
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