Granules India’s Q2 net profit rose 26 percent to Rs 41 crore as compared to Rs 32 crore in the corresponding period a year ago. The company’s revenue grew 3 percent to Rs 364 crore.
Speaking to CNBC-TV18, the company’s MD C Krishna Prasad said that revenue was impacted due to a fall in raw material cost, floods in Hyderabad and use of some API for in-house production work.
The company’s finished dosage (FD) segment currently has 37 percent share. Prasad expects FD share to go up to 60 percent in the next 3-4 years.
Granules has filed for 2 abbreviated new drug application (ANDAs) in US already and is hoping to file two more this year. In India, it has filed 3 already and will be filing 4 more. Prasad anticipates 30-40 percent bottomline growth in FY18.
The company is looking at new geographies and could enter Europe and Russia.
Below is the transcript of C Krishna Prasad’s interview to Sumaira Abidi and Nigel D’souza on CNBC-TV18.
Sumaira: To begin with, can you tell us what is the reason for this slower growth of just about 3 odd percent this time around. We also believe your active pharmaceutical ingredient (API) division saw a slowdown. What is the reason for that?
A: The quantities produced are not a lot less, but the prices of some of APIs have gone down due to the key raw material prices also going down and that has contributed to lesser revenues without changing the profit. In fact, for some of the products the profits have gone up but revenues have come down. That is the key reason.
Second reason is some of the API we were produced were used for in-house production, captive production to make finished dosage (FD) and that has otherwise which should have been sold in the market and that is another reason for revenues coming down. Again that has contributed to higher profit. We made extra bottomline on that.
Third small reason is we had floods in Hyderabad last month and one our API plants has been shut down for about three days. That also had a small impact.
Nigel: Then how does the second half of the year look? That is the first part of the question, just scratching upon the first point. And also, your fixed dosage business, that is contribution around 37-38 percent from around 30 percent. That is what is helping your margins what is the outlook on the margins as well going ahead?
A: The margins will definitely be protected and maybe go up a bit. I do not see it coming down and FD business also, as we go by, I anticipate the percentage will keep going up.
Sumaira: What is the contribution of your FD to this and how much do you think it can be scaled up?
A: FD today is about 37 percent this quarter, but last quarter was 30 percent. And we do expect, at least our target for the next 3-4 years is to touch about more than 60 percent on the FD.
Nigel: What about the Abbreviated New Drug Application (ANDA)? I believe you have got a few approvals already for around five products in the United States. What is the pipeline over there? Is it 10-15? The street is working with a number in the midst of that number.
A: US, we will be filing two ANDAs this year. Research and development (R&D) work is going on and batches are being taken. In India this year, we have already filed three ANDAs and we will be filing four more at least this year. Next year, it will be a much higher number.
Sumaira: We expected your contract research and manufacturing services (CRAMS) plant was expected to be inspected by the US Food and Drug Administration (FDA) in 2016. What is the status on that and can you take us through the FDA schedule?
A: We expect that it should be inspected anytime in the next few months. One of our customers has filed with the FDA and we expect the inspection anytime.
Nigel: You are sounding quite confident, quite a few filings are likely to come in as well. Everything is looking good. FY18, what can the numbers look like, what kind of revenues are you working with? I am just reading a brokerage note and they are indicating that you are likely to do revenues of around Rs 1,900 crore. In the last year, you did around Rs 1,450 crore approximately. Is that possible? Are you looking to beat that? Are they too optimistic?
A: FY18, Rs 1,900 crore, I would doubt -- I do not know what is the bottomline you have seen, but definitely the bottomline will grow by another 30-40 percent.
Nigel: From the same report, the FY18 bottomline they are estimating at more than Rs 200 crore. Last year, you did around Rs 120 crore. So, is that possible?
A: Yes, that is possible. That is fairly quite easy.
Sumaira: Any new geographies you are targeting?
A: We are planning, but as such no initiation has happened. Maybe east Europe and Russia could be fresh areas we may enter into and Japan.