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Granules India

BSE: 532482|NSE: GRANULES|ISIN: INE101D01020|SECTOR: Pharmaceuticals
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Mar 15
Chairman's Speech (Granules India) Year : Mar '16
DEAR SHAREHOLDERS,
 
 The Financial Year 2015-16 was an exceptional year for Granules India
 as we took several strides to enable us to grow in newer avenues, while
 strengthening our core. In the past three decades, we had built a
 strong foundation and now we are steadily progressing towards achieving
 greater scales of success based on our core competencies.
 
 Growth continues to be our driving force as we march ahead with our
 values and guiding principles. We are pleased with our numbers, where
 we registered a gentle 11% topline growth over the previous year.
 Our consolidated revenues stood at Rs.14,312 million in FY16, against
 Rs.12,937 million in FY15. We have once again demonstrated excellence
 in our operational efficiencies by exhibiting an EBIDTA growth by
 34% to Rs. 2,844 million as against Rs. 2,130 million in the
 previous year.  Our PAT grew by 30% to Rs.1185 million against
 Rs.909 million in FY15.  Vertical integration in the entire value chain
 has enabled us to improve on a continuous basis on various parameters.
 Our shift in product mix also complements our endeavor to continue to
 expand on our margin profiles. Our EBIDTA margin improved by 3.4%
 and PAT margin improved by 1.3% compared to previous financial
 year. In terms of geographic concentration, regulated markets of the
 U.S., Canada and Europe put together, contributed 60% of the sales
 in the financial year 2016.  Our core five molecules put together have
 contributed around 87% of the sales. Going ahead, we will continue
 to reinforce our energy on making ourselves more robust by enhancing
 our capacities, improving our efficiencies, adding new products, moving
 up the value chain and most importantly, offering better services to
 our customers.
 
 The business model of Granules is evolving to be future ready. Today,
 the business is bucketed into three areas. First and foremost is our
 integrated ''Core Business'' model, which has created a leadership
 position for the Company with regards to the sales of several off-
 patent volume-based drugs. We have a strong presence in ''first line of
 defense'' products such as Paracetamol, Ibuprofen and Metformin. To
 supplement the Core Business on a long term basis, we have also
 ventured into manufacturing and marketing of private label OTC products
 to the retail chains in the US market. Secondly, we are ramping up our
 ''New Business'' in line with our strategic intent of enhancing the
 product portfolio. We have acquired Auctus Pharma, which has given us
 access to the multi-product manufacturing facility in Vizag. We have
 set up a dedicated API R&D center in Hyderabad to focus on the
 development of complex products with limited competitors. We also
 bought the Virginia facility in the US to focus on formulation R&D.
 Third, we entered into the ''CRAMS Business'', with an equal joint
 venture with Ajinomoto OmniChem - our partner, with nearly 40 years of
 experience in CRAMS. We began the commercial production from September
 2015.
 
 With this in hindsight, let me now share some of the key business
 highlights during the last financial year. To de-bottleneck capacity
 constraint at API level, we have increased the Paracetamol capacity at
 our Bonthapally plant by 3,000 metric tons per annum. We have also
 started working towards enhancing our Metformin and Guaifenesin API
 capacity by 7,000 tons per annum and 2,000 tons per annum to further
 solidify our global position in these molecules.  On the PFI front, we
 added 4,000 tons capacity last year and with this new addition our
 total capacity is now 18,400 tons per annum.  Presently, we have
 sufficient capacity in FDs.
 
 In the month of September 2015, the US FDA had approved Ibuprofen ANDA
 filed by us for 400 mg, 600 mg and 800 mg tablets. This has further
 strengthened our Core Business and enabled us to increase our product
 offerings to our customers in the United States. We have started sales
 of this product and expect the sales to ramp up steadily in future.
 
 We are reinforcing our R&D backbone through prudent investments
 with an objective to ensure sustainable pipeline of value accretive
 future opportunities. Our research and development initiatives are
 strongly determined by market demand and driven by technological
 progress. Our R&D team comprising 150 people, continuously focuses
 on supporting the growth strategy of the organization by introducing
 new generic products with high value and complexity, striving for
 constant process improvement and attaining manufacturing cost
 competence for existing as well as new molecules.
 
 The renovation of our Virginia facility is complete and R&D work
 has already begun. Presently, this facility is focusing on formulation
 development. We expect to begin the filing of ANDAs from this facility
 from the financial year 2016-17.
 
 In conclusion, I would like to reiterate that our team has always
 played a crucial role in our success over the years. We possess a
 talented workforce, our partners in progress, and empowering them while
 creating space for amicable work culture nurtures their true potential.
 We continue to strengthen our talent base and encourage them to think
 innovative and embrace challenges to grow both laterally and
 vertically. Our leadership team has been an important catalyst in this
 journey and has helped us align the goals of our employees with those
 of the organization.
 
 Looking into the future, we expect to overcome the short-term
 challenges and deliver long-term sustainable growth. I would like to
 thank all the stakeholders for their continued support to the Company
 and for helping us perform year after year. I also thank every member
 of the Granules family and believe that an exciting and successful
 future lies ahead of us.
 
 Regards
 
 Krishna Prasad Chigurupati
 
 Chairman & Managing Director
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