No proposal to buy any new company: Jubilant Organosys

Excerpts from Markets Midday on CNBC-TV18 Watch the full show »

In an interview with CNBC-TV18, Shyam S Bhartia, Chairman and Managing Director, Jubilant Organosys speaks about the results and his outlook for the company.

Here is a verbatim transcript of the exclusive interview with Shyam S Bhartia on CNBC-TV18. Also watch the accompanying video.

Q: The profits just about higher how have been the exceptional losses in terms of forex, can you give us a breakup of your profit performance?

A: Our EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization) has been higher by 52% YoY to Rs 238 crore this quarter. The revenue has gone up by 6% to Rs 961 crore. The EBIDTA has gone up because of our focus on pharma and life science business, which has gone up by 13% because of our CRAM (contract research and manufacturing) business, which is increasing at a rapid rate of about 10%.

The volumes in the CRAM business are higher, but the value pricing is lower because of the lower cost of input. Therefore, the profitability is retained in the business. Moreover, the EBITDA margins from our overall pharma and life science business has gone up from 23% last year to 28% in this quarter and this is likely to remain.

Q: We have had a significant appreciation of the rupee, yet you have improved your margins, how do you see this scenario? Do you see the rupee continue to appreciate so what are you calculating the value as you sell, do you think you can increase your output prices or the prices you charge? What do you think about raw material costs? Could you shed some light on how raw materials, the rupee appreciation and the cost you can charge look like overall?

A: The rupee appreciation is very important because 64% of our business is international business. Whereas the rupee appreciation affects our margins, but at the same time the imports of some of the raw materials are also at a reduced rate. The net effect is definitely negative on the margins. But if you see inspite of the negative effect on the margins we are able to maintain the EBIDTA margins, this is because we have global leaders in many of our products, we have had some pricing power and not the total pricing power, but we are also reducing on a continuous basis, continuous improvement in the lead management. I think that is the reason why we are able to maintain the margins.

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Q: You have also been exceedingly aggressive over a period of time and I mean it in a good way in buying companies out in the US perhaps, the front ends. What is the schedule like in the next 3-6 months are you closed to buying anybody out or is it more organic as we speak at the moment and do you need any more capital to do that?

A: We don't have any proposal of buying any new company. Our existing operations in the US and in Europe are doing extremely well mainly. We are growing those operations. We have expanded our capacity and the number of people, so that's a good sign that we are expanding our existing operations.