Plethico Pharma sees 15-18% growth in next 2 yrs

Plethico Pharma has announced its FY10 third quarter results. It net profit is up by 29% at Rs 56.6 crore versus Rs 44 crore. The company’s operating profit margin (OPM) is at 17% versus 21%. Its net sales are up by 32% at Rs 332 crore versus 251.6 crore.

In an interview with CNBC-TV18, Sanjay Pai, Chief Financial Officer of Plethico Pharma spoke about the results and his outlook for the company. Below is a verbatim transcript of an exclusive interview with Sanjay Pai on CNBC-TV18. Also watch the accompanying video.

Q: Russia which has always been an important market for Plethico Pharma. How much do the Russian markets contribute to the revenues? What are the growth plans from hereon?

A: In terms of the consolidation, it works to about 11% of our total revenues. However, our Russian business or the CIS business is that we now have a component which is now directly selling to Rezlov. It is a company in which we have a stake. We are now also selling to the retail pharmacies though a company in which we invested last year and acquired a 20% stake. The consolidated numbers are giving us the total CIS 11% sales. So we have been able to de-risk ourselves to a great extent. We are able to access the retail pharmacies through Tricon’s retail pharmacy companies. This is helping us to improve our receivable dates which have been one of the major problems with respect to CIS. In the next one year or a couple of years we will be able to completely bring down the receivable days from CIS.

Q: With the acquisition of Natrol you have effectively entered the US market. How is that acquisition coming along?

A: In terms of physical exports, that really now does not capture the full picture. It would not be appropriate to look at the company from a export vis-ŕ-vis a domestic because Plethico needs to be looked at from a consolidated perspective. If you look at it from a standalone perspective, it really would not make sense. The whole business dynamic is undergoing a tremendous change. In the coming years, one will see that the business as a whole will grow and it would be inappropriate to look at it from a export vis-ŕ-vis domestic sales. One will have to look at it from the sale perspective which we have in India and outside. If one looks at that then almost 90%-95% of our sales will come from international level. A small percentage of our sales, which is 5-8%, comes from the Indian markets. This is basically the consumer product division of Plethico which sells products like Coach's Formula, Travasil, etc. in India. Hence, that is the piece which is there in India so that is a very small piece of the whole pie.

Q: Your net sales are 32%. What kind of revenue growth do you think you can deliver in the next two years?

A: In terms of growth rate, I have always been very conservative in my numbers. I would put a finger at somewhere around 15-18%. Although we have been historically growing at a much higher percentage, I think looking at the current scenario it would be fair to say that we will grow at 15-18% and thereon keep it consistent at bout 15%.