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Jubilant Life Sciences
BSE: 530019|NSE: JUBILANT|ISIN: INE700A01033|SECTOR: Pharmaceuticals
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Explore Jubilant Life connections « Mar 10
Chairman's Speech (Jubilant Life Sciences) Year : Mar '11
Dear Shareholders,
 
 This is the first year when we report the performance of Jubilant Life
 Sciences as a pure Pharma and Life Sciences Company. During the year
 the name of the Company was changed from Jubilant Organosys Limited to
 Jubilant Life Sciences Limited & the Agri and Performance Polymers
 business was demerged from the Company. We believe this step has
 further accentuated our partnering capabilities for value creation in
 Life Sciences, for all our stakeholders.
 
 For FY2011, Jubilant Life Sciences recorded consolidated Revenue of Rs.
 34,334 million, EBITDA stood at Rs. 5,672 million, Net Profit was Rs. 2,297
 million and the Basic EPS stood at Rs. 14.42 (face value Rs. 1 per equity
 share).
 
 Our Life Sciences Products business at Rs. 26,849 million which is 78% of
 the overall revenue, reported a growth of 9% while the Life Science
 Services business delivered revenues of Rs. 7,485 million, contributing
 22% to consolidated revenue. The Life Science Products business
 witnessed good volume growth across all products.  This growth was
 particularly fuelled by robust performance of APIs and Life Science
 Chemicals in the Ingredients space and new product launches and market
 share gains in the Generics business.
 
 In Life Science Services business we have seen a muted performance for
 the year but the business has turned around in last quarter. Previous
 year had record sales with one time opportunity in H1N1 which was not
 continued in FY 2011; excluding the onetime H1N1 contract last year,
 CMO Services grew 5%. Functional services performed well though drug
 development activity in the US faced pressure on account of market
 slowdown, pharma consolidation and delayed on boarding of new
 integrated programs.
 
 The Company''s success so far is due to its strategic focus on its Life
 Science Products and Services businesses, moving up the value chain for
 products, providing services across geographies, constantly investing
 in various growth platforms and promoting a culture of innovation.
 Going forward, we are confident of our continuous ability to deliver on
 the promise of a leading outsourcing player.
 
 Global Pharma Outsourcing & India Opportunity
 
 World over, there is pressure on Governments to reduce spiraling
 healthcare costs given the rapidly ageing population. The use of low
 cost generics is being encouraged across the developed world. The
 increase in patent expiries is further putting pressure on the
 innovators who are slated to forego products worth US$ 200 billion over
 the next 5 years. This brings in additional pressure on the innovators
 set to prioritise the replenishment of new product pipelines and
 step-up outsourced manufacturing. Recently, several large pharma
 companies have declared their intent to outsource their manufacturing
 to cost efficient destinations.
 
 The Global Pharma outsourcing [Contract Research Organisation (CRO)
 
 6 Contract Manufacturing (CMO)] market which was valued at US$ 67
 billion in 2010 is expected to reach US$ 90 billion by 2012. Although
 India is a preferred destination for cost competitive & qualitative
 pharma outsourcing, the penetration levels so far are quite low. The
 Indian Custom Research & Manufacturing Services (CRAMS) industry at US$
 3 billion is around 4-5 % of the global pharma outsourcing market.
 These trends augur well for CRAMS/ Pharma Outsourcing. The penetration
 of both CMOs and CROs is expected to increase up to 50-60% by 2015,
 which brightens the long term visibility for the CRAMS industry. India
 with its inherent strengths stands to gain from these positive trends.
 
 Partnering for Value Creation
 
 Jubilant Life Sciences is well positioned to capitalise on the global
 outsourcing opportunity. Our wealth of knowledge in chemical and pharma
 research, respect for Intellectual Property Rights (IPR), world-class
 Good Manufacturing Practice (GMP) & multi locational US FDA approved
 manufacturing plants, large talent pool, low R&D & manufacturing costs
 give us an additional edge in this domain. Over the years, we have
 strengthened our integrated business model to offer products and
 services across the pharma value chain including end-to- end drug
 discovery and development solutions. This enables us to partner
 innovator pharma and life sciences companies for sustainable value
 creation. We remain committed to strengthen our value offering through
 global scale of operations, focus on innovative solutions, to deliver
 value to our partners across the world.
 
 Today, we are recognised as a preferred partner by leading pharma and
 biotech companies. We remain focused on continually improving our cost
 competitiveness and quality of production, through investment in R&D,
 implementation of Lean Management methodology and Six Sigma business
 strategies in manufacturing, efficient design & project management in
 order to accelerate the ''speed to market'' for our customers'' products.
 
 Creating a Focused Life Sciences Company
 
 In order to reflect the focus of the Company as a pure pharma & life
 sciences player, the name of the Company was changed from Jubilant
 Organosys Limited to Jubilant Life Sciences Limited with effect from
 October 1, 2010. Also the process of the demerger of Agri and
 Performance Polymers business and the listing of the demerged entity
 separately as Jubilant Industries Limited was completed on February 14,
 2011. We now have two operating and listed companies; Jubilant Life
 Sciences Limited and Jubilant Industries Limited, with eminent members
 on the respective Board with independent Directors, focusing
 independently on the growth of the respective Company.
 
 Dividend
 
 For FY 2011, we have announced a dividend of Rs. 2 per equity share of
 face value Rs. 1 each which is 200% for the year. This year''s dividend
 will result in a payout of Rs. 370 million including dividend tax.
 
 Vision 2014
 
 The Company''s future growth strategy will be driven by four key factors
 of capacity enhancement; innovation led new launches; expansion of the
 geographic markets and vertical integration. We see continued volume
 growth in the Life Science Products business on the back of new product
 launches and existing product ramp-ups. Good growth through
 geographical expansion into international markets is expected to be led
 by penetration into Europe, Japan and Emerging markets. The realignment
 of the Services business with market requirements will bear fruit in
 terms of better performance and margin enhancement.
 
 We launched a new program Vision 2014 which will enable us to
 witness:
 
 1.  Enhanced revenue momentum driven by robust geographical growth as
 well as innovation led new products and launches,
 
 2.  Operating profit improvement due to revenue growth in Products
 business, margin improvement in Services business, competitive
 advantage with vertical integration and innovation led cost reduction
 programs with the help of Six Sigma projects,
 
 3.  Attractive Return on Capital Employed through higher operating
 profits and better capital utilisation and
 
 4.  Strong balance sheet with contained debt levels.
 
 During the period, we have made investments in setting up new
 capacities including one of the largest Sartans plant for APIs to tap
 the CVS market, a Niacinamide plant for Vitamin B3 in Nutrition
 Ingredients to further consolidate our leadership position, Symtet and
 Pyridines plants to meet the increasing customer demands while moving
 up the value chain in forward integration initiatives.
 
 In FY 2012, our overall capex plan is at Rs. 5 billion which is likely to
 generate revenue of more than Rs. 12 billion at current prices and full
 capacity utilisation.
 
 Corporate Social Responsibility
 
 In line with our continued focus on the sustainability of the business,
 we aim at improving stakeholder value through improved eco efficient
 use of capital and natural resources. Our approach to sustainable
 development focuses on the triple bottom line of Economic, Environment
 and Social performance.
 
 Corporate Social Responsibility is an integral part of how we conduct
 our business and our efforts are directed towards community development
 and inclusive growth. Going forward, we will be engaged in
 strengthening our initiatives in the areas of Primary Education, Basic
 Healthcare and
 
 Livelihood Generation programs for our communities.
 
 Partnering for Growth
 
 We stay committed to partnering for value creation and take this
 opportunity to thank all our stakeholders including independent
 directors, our customers, partners, bankers and shareholders for
 reposing their confidence in the Company and providing their unstinted
 support.
 
 We also take this opportunity to appreciate the contributions of our
 employees across India, North America, Europe and other parts of the
 world, who have participated in our journey this far. Through their
 tireless efforts, enthusiasm and dedication, we have reached this
 global size and scale. With our collective effort we will continue to
 surpass the expectations of our customers and provide world class
 products and services.
 
                                        Best Wishes and Regards,
 
 Shyam S Bhartia                                 Hari S Bhartia
 
 Chairman & Managing Director    Co-Chairman & Managing Director
 
 May 10, 2011
Source : Dion Global Solutions Limited
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