Granules India's revenue to go up to Rs 450cr by year-end

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Granules India's revenue to go up to Rs 450cr by year-end

Revenues of Granules India Ltd, which had signed a USD 50 million contact with an MNC last year, are expected to go up to Rs 450 crore expect by the end of this year, says its Chief Marketing Officer Harsha Thigurupati. "Most of this will be fueled by API but more so because of increased finished dosages sale," he adds.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Granules India See previous management interviews See what other Experts & Brokerages are saying about Granules India Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

Revenues of Granules India Ltd , which had signed a USD 50 million contact with an MNC last year, are expected to go up to Rs 450 crore expect by the end of this year, says its Chief Marketing Officer Harsha Thigurupati. "Most of this will be fueled by API but more so because of increased finished dosages sale," he adds.

Here is a verbatim transcript of the exclusive interview with Harsha Thigurupati on CNBC-TV18. Also watch the accompanying video.

Q: Could you take us through what are the expansion plans-we understand you have one of your facilities inspected and approved by US FDA shortly, what is the status there and what are the other expansion plans you have underway?

A:  What we have been doing for the last two and half to three years is that we have spent a lot of time investing in infrastructure to take us to the next level. So we have invested our new Paracetamol Active Pharmaceutical Ingredients (API) facility as well as our new tableting facility with a capacity of six billion tablets. So most of our revenue over the next two years is going to come from increased API sales and especially increased sales of finished dosages.

In the pharma industry, when one moves from API towards finished dosages, the margins will get better. And another advantage we have had is by being to supply APIs, the directly compressible granulated grades as well as finished dosages we are actually one of the very few integrated pharmaceutical suppliers for the products that we manufacture like Ibuprofen and Paracetamol.

Q: So what can you tell us in terms of how your revenues grow as the capex plans fructify and how your margins will expand- can you give us some numbers?

A: Last year we had growth of about 50% from revenue increases from Rs 256 crore to Rs 385 crore. We expect those revenues by the end of this year to go up to Rs 450 crore. Most of this will be fueled by API but more so because of increased finished dosages sale.

In terms of margins we had an EBITDA of 5% last year and because this is still the first year that we are actually supplying finished dosages there will not be a huge increase in terms of EBITDA margins but we will definitely maintain same margins for APIs as well as our granulated products and we can expect upto 5-8% higher margins for our finished dosage products compared to our APIs and granulated products.

Q: You are still primarily and PFI and an API-driven business. I believe finished dosages still have to pick up - it is still a small contribute in terms of your topline about 2-3% how are you maintaining this 15-18% operating margins because usually for API and PFI industry it is usually mid to low single digits?

A: Especially over the last two years our customer base has changed from the more price sensitive to more of the multinational people for who price is not everything. They recognize that quality as well as the security of supply is a lot more important and price is important to them but not as much as security of supply and quality which is essentially what we pioneer at in terms of APIs and finished dosages.

So for example last year we were able to sign a USD 14 million contract with a multi national, we have a pricing formula where by the price of our finished product really depends on the price of our raw material. So essentially we have been able to protect our margin there. Because what customers are really looking for today is security of supply.