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Last Updated : Jan 15, 2016 08:23 AM IST | Source: CNBC-TV18

Aim at 20% gain in profits after launch of allopathy: Celestial

In an interview with CNBC-TV18, AN Singh, CMD of Celestial Biolabs said that the company is in process of obtaining raw materials and once the drugs are introduced in the market a 20 percent gain in profitability is expected in last quarter of this fiscal.


Hyderabad based pharmaceutical company Celestial Biolabs has received regulatory approval to manufacture and market allopathic drugs and plans to start manufacture in February, 2016.

In an interview with CNBC-TV18, AN Singh, CMD of Celestial Biolabs said that the company is in process of obtaining raw materials and once the drugs are introduced in the market a 20 percent gain in profitability is expected in last quarter of this fiscal.

Below is the transcript of AN Singh’s interview with CNBC-TV18's Mangalam Maloo and Reema Tendulkar.

Mangalam: If I quote your release that you had given to the exchanges you had said that this will enhance the company's sales volumes and profitability. So could you give us some colour on by how much will your sales go up by and what is the kind of profits you are looking at from these products and by when?

A: Already we have the established network of the distributorship. So, this product we will be able to introduce by the end of February in the market. So, the net result will be visible in the last quarter definitely. We should be able to increase our sales and profitability by 20 percent at least.

Reema: In FY17 your revenues and profits will go up by 20 percent because of allopathic drugs?

A: Yes.

Reema: You said you will start manufacturing in February. Will you also be able to introduce in the same month?

A: Yes, that is what I told that by the end of February we will be able to manufacture. So, that it will take about 15 days to send these products to our distributors. So, the net result we will start in FY17 but then some definitely increase will be there in the last quarter.

Mangalam: In the first half of the last financial year your EBITDA margins were 28 percent while full FY15 your EBITDA margins were close to 45 percent. So, could you explain the sharp uptake in the EBITDA margins in the second half and can we expect it in this year itself?

A: If you can take the last financial year the depreciation rule got changed because we will have to take a cumulative effect. So, with that actually it has affected and now in this financial year that will be revised because that will go as per the schedule. So, this EBITDA will be definitely reflecting what the advantage we could not get in the last financial year.

Reema: What is the capital requirement for manufacturing these allopathic drugs?

A: Right now we will be managing only with the working capital requirement. So, the whole about Rs 2.5 crore we are introducing to produce these 20 allopathic drugs which will go in the market.

Mangalam: Another concern that I had is the fact that the promoters just hold 38.8 percent in the company while I understand that it has been rising from close to 36 percent last year but that has been on account of diluting the equity base. If you are so confident of your business model why would you not buy from the open markets then?

A: Right now, we are trying to increase our stake by introducing through the – not exactly through the open offer. We are going through the promoter equity through the warrants because we get some time to bring the money through the promoter’s equity warrant. 25 percent we have already brought it and the balance we are slowly bringing.

Taking from the market we will have to put the money straight away upfront which we would like to introduce in the business rather than taking the money in increasing the stake. Stake we will be increasing through the warrant where we are going to get about 15 months time.

Mangalam: What is the target promoter stake that you are looking at going forward?

A: Ultimately we would like to make it to at least more than 50 percent which we are very sure that in due course of time we should be able to do that.



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First Published on Jan 14, 2016 04:40 pm
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