Aim to see turnover of USD 5 bn by 2020: Cipla Chairman

Cipla is targeting a turnover USD 5 billion by 2020, the company’s chairman YK Hamied said in an interview with CNBC-TV18.

Net profit jumped 90 percent year-on-year to Rs 500 crore for the quarter ended September 2012. Hamied attributes two factors to the strong performance. Also Read: Cipla Q2 net profit jumps 90% to Rs 500 cr "Firstly, we have embarked for the last six months on series of rationalisation procedures, changing the organisational structural of the company. Secondly, once in a while you hit the jackpot. So, we have had a one time achievement that has contributed a lot to the bottom-line," he said. Below is the verbatim transcript of YK Hamied's interview on CNBC-TV18 Q: It has been an absolutely spectacular performance for you this quarter. The profitability is up 62% to Rs 500 crore and your margins too have expanded to 31%. Can you take us through the highlights and what went so correct this quarter? A: If you look at another figure, 56% of our turnover this quarter has been export and 44% has been local. So, that has been an important change. It used to be 50%-50%. We get better margins abroad than in India. With the price control in India more of the Indian companies are now concentrating on exports. Q: Have you seen any sort of exceptional bottom-line in this quarter or was it just an operational performance which helped you clock Rs 500 crore of profit? A: Two things contributed to that. Firstly, we have embarked for the last six months on series of rationalisation procedures, changing the organisational structural of the company. So, that has been one major factor of reorganisation and restructuring of the management of the company. Secondly, once in a while you hit the jackpot. So, we have had a one time achievement that has contributed a lot to the bottom-line. Q: These margins of 31% and profitability figure of around Rs 500 crore - is it sustainable or is this aberration that we have seen in this quarter? What would your guidance be for the remaining part of the fiscal for FY13? A: Rs 500 crore on a turnover of Rs 2,100 crore is quite exceptional. It cannot be sustained on an indefinite period, but we will still manage pretty well. I can’t guarantee that we will be down and out, but I can already tell you that the third quarter that has started has been on a quite a promising note. Q: Is margin performance of 31% something sustainable? How exactly is the Indore SEZ doing at this point in time? What sort of scale up in margins could we see or would you just stabilise between this 27%-31% odd mark? A: The Indore factory was inspected by the USFDA last week and it has got approved. So, that has been a very good point. Shortly, products from there could find their way internationally. That is one good factor. Moreover in Indore, we have a built-in capacity which will hold us in good stead for the next few years to come. It’s like a reserve, having an extra tank full of petrol for the future because our targets are quite high. We hope to achieve a turnover of USD 5 billion by the year 2020. It’s not far to go. This year, by March 2013, our target is Rs 8,000 crore - that is about USD 1.5 billion. _PAGEBREAK_ Q: How have you done in the domestic formulation business? A: 44 percent of our business is local and 56 percent is international. Q: The previous quarter you saw 30 percent growth. Any sorts of percentage growth that can you guide us? A: This quarter was 14 percent and overall for the half year has been 21.5 percent. Q: How did the export business do? A: This quarter, exports increased of 33 percent but overall for the half yearly period it has been 26 percent. Q: What is the trajectory that we can expect for the domestic as well as the export business going forward? A: The total increase for both the quarter and the half year has been 23.7 percent. Q: Can you give any guidance for the export business. For example, how are your supplies for Lexapro generic doing to Teva at this point and how much of a bump up can we see for the second half of the fiscal? A: The exclusivity period is now over but there are many other irons in the fire. We have got other products as well. Lexapro has not been the only product that we are banking on. There are number of other products as well. Q: Could you give us with some sort of guidance for FY13? What sort of ballpark figures can we expect on the revenue, EBITDA as well as the bottom-line? A: I have said that the company was targeting a growth in excess of 15% for the year 2012-13 in turnover. This also depends very much on the exchange rate movements of the currency in dollar terms and the opportunities in the US market. Q: Was there any forex impact this quarter? A: We have a system where the forex no or minimum impact on our performance. It has some impact, but absolute minimum. I don’t speculate. I am a very conservative person by nature. I would like to tell the viewers that to be in a position to export profitably, I had suggested to the commerce ministry that those companies that are stable in the domestic market perform better internationally. What we require today is pragmatic drug policy, a pragmatic pricing policy, a pragmatic compulsory licence policy. We indigenous pharma manufacturers are the backbone of the industry. The government should take us in confidence when they frame laws. Today, we really get a step motherly treatment from the government. We are the backbone of the industry, the indigenous manufacturers like Cipla.