Mangalam Drugs plans to enter HIV API space

Mangalam Drugs Organic' revenue declined 6 percent in the March quarter but the company's Managing Director Govardhan Dhoot is unfazed by the dip and says that overall the company's performance was good. "We hope to continue to improve our margins in FY17 and definitely hope to better our FY16 performance," he said. The company hopes to achieve 25-30 percent growth rate on the back of its expansion plans.Dhoot said that the company plans to get in to the HIV API segment and as the drugs for ailments like malaria and HIV are well-accepted in the market, it'll be an advantage for Mangalam Drugs.Below is the transcript of Govardhan Dhoot’s interview with Reema Tendulkar on CNBC-TV18.Q: First if you could tell us why your revenues were down 6.5 percent year-on-year and down 14 percent on a quarter-on-quarter basis (Q-o-Q) basis?A: Y-o-Y our revenues were up.Q: In Q4, are your revenues not at Rs 70 crore versus Rs 75 crore?A: No, Y-o-Y, we have Rs 220 crore last year, this year we have Rs 295 crore. Y-o-Y you asked.Q: No, I meant the Q4 revenues when I compare it to last year.A: Q4 comparatively, but we have to take overall year in prospective I feel, not just the last quarter because overall even the performance is much better than last year, Y-o-Y.Q: We will come to the full year performance, but we just wanted to understand why growth slowed down for you in the March quarter.A: No, on an average it is maintained. We had better a December due to various factors in that quarter. Otherwise, we have mentioned the average is and this is the same average – Rs 74-75 crore per quarter.Q: Because I remember, when we had interviewed you in January, you had told us that revenues in the March quarter should be around Rs 80 crore. Compared to that, it was about Rs 70-71 crore. But anyway FY16 performance has been very strong 34 percent. Will you be able to maintain this revenue run rate even in FY17?A: Yes, of course and we definitely hope to better it because our expansion is in progress and we hope to add our expansion revenues August onwards to this existing growth also.Q: Could you quantify what could be the revenue growth?A: it is difficult to make that solid forecast, but we should be around 25-30 percent from now on.Q: What about your margins? Margins too improved for FY16. It stands at 10.75 percent. If you could help us with the margin outlook for the coming year?A: We hope to continue on this and we may also slightly improve on the margins. Of course, this will be maintained.Q: Can you elaborate more on the expansion plans which kick in and how much will they contribute to your revenues in FY17?A: We are basically expanding to get into HIV active pharmaceutical ingredient (API), so that is our intention and the production should start contributing to the revenue from September onwards. So, maybe another six months could be added to this and 25 percent growth of our existing business plus that, that is how we look at it once we get into this.Q: What is the nature of opportunity in the HIV API segment that you are getting into?A: The regulatory is common, our customers are common and so, it will make it easier for us to play in this field. We will be doing it with big volumes as well. So, Malaria and HIV are well accepted and huge companies got into this. But that is an advantage for us. We have common customers and common a regulatory.Q: Your current promoter holding is below the 50 percent markets. Nearly, 45-46 percent.A: You have wrong information, we are beyond 50. 52 percent.Q: My apologies. When we also last spoke to you, you indicated that you were awaiting a World Health Organisation (WHO) approval for certain drugs and you wanted to produce the Hepatitis C drugs post the WHO approval. Could you give us an update on progress report on that?A: Unfortunately, the approvals are still not come. It is very difficult to really give you a correct date. It may just come any moment and anytime. It is in the queue, as and when it comes, definitely you will be the first one I will share it with.