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Last Updated : May 18, 2016 04:47 PM IST | Source: CNBC-TV18

Animal health biz to drive growth up over 50% in FY17: SeQuent

The company is on a firm growth track and delivered a 43 percent growth in FY16, and plans to do well in FY17, says Manish Gupta, CEO of SeQuent Scientific.

The major reason behind a lacklustre fourth quarter earnings for the company were due to the local political situation and currency depreciation in Turkey, said Manish Gupta, CEO of SeQuent Scientific.  

He expects these headwinds to stay in the first two quarters of FY17, but looks forward to significant improvement thereafter.

Turkey contributes about 20 percent revenue in the veterinary business and 10 percent on a consolidated basis, which is expected to move up in FY17, he said.

The company is on a firm growth track and delivered a 43 percent growth in FY16, and plans to accelerate it in FY17, Gupta added.

Animal health business will drive growth for the company and is expected to grow over 50 percent in FY17, he maintained.

Below is the transcript of Manish Gupta’s interview with Reema Tendulkar and Nigel D’souza on CNBC-TV18.

Reema: It has been a bit of a lacklustre quarter for you in Q4. Are things picking up in the first quarter? What is the outlook looking for FY17?

A: In Q4 and actually, it started from Q3, we were faced with certain headwinds in Turkey which is our most profitable market and this was both on account of certain local political situation which has been bad and also currency depreciation. And between the two, there was a pressure which led to lacklustre quarter, especially Q4. Having said that, we expect the same headwinds to stay for the first two quarters and improve thereafter. So, we expect significant recoveries from Q3 and Q4. However, from a strategic front, we are on a firm growth track and if you look at the complete year, we delivered about 43 percent growth and we expect to accelerate that during the current year.

Nigel: I was looking at your past numbers. There was close to around a 70 percent increase in your animal health revenues. Do you expect to keep up with this run rate? And also, you are talking Turkey being a fairly profitable destination for you. What part of your revenues come in from there?

A: In the veterinary business, about 20 percent of our revenues comes from Turkey. And on an overall consolidated company perspective, it will be about 10 percent. And that would definitely recover, as I mentioned during the current year.

Nigel: What about the second part of the question that I was asking you about your animal health revenues. There was a big spurt in the past year – more than 50 percent for FY17. What can you guide? And also give us some sense about your margins because that has been a tad bit of a disappointment in the last quarter.

A: That is certainly correct, but having said that, we are still an evolving business, so I would shy away from giving guidance. Having said that, our veterinary business will continue to drive the overall growth of the company and will therefore grow faster than the human active pharmaceutical ingredient (API) part of the business. As far as our margins are concerned, clearly they will continue to be under pressure as we really invest in growth and that would be more in terms of research and development (R&D) investments that will be required at our end. So I do not foresee a significant surge in our margins in the medium-term.

Reema: if you could just give us some numbers in terms of your expectation in the animal health business which you said will drive growth. What could be the growth expected over there in FY17? And even for Human API which you are saying will be a bit sluggish, what could be the expected growth?

A: If you look at our last year, our growth in the business was upwards of 43 percent driven by a faster growth in the Alivira or the animal health business. I expect a similar replication. So, our human API business should grow at about 25 percent during the year. And our veterinary business will grow at upwards of 50 percent during the year.

Reema: One final question. You had raised some money last year. What plans are you going to be utilising it? If you could just give us some update on that?

A: We still are left with about half the money that was raised last year and that will be used to fund our inorganic geographic growth in terms of additional geographies that we are envisaging during the year. So, we expect this money to be fully utilised during this year.

Nigel: So, what exactly is the current cash balance and how is your bank balance sheet looking like. Could you tell us very quickly?

A: Currently, our debt equity ratio is about 0.3:1 and we have upwards of Rs 150 crore of cash in our hand.

Reema: Could you elaborate a little more about your plans to enter into the new markets with the cash on your books?

A: As you are aware, we have already announced an acquisition in Brazil which is the third largest veterinary market in the world and we expect to conclude that transaction sometime in July. Thereafter we are still looking at certain specific targeted acquisitions in Europe which will help us to fully establish in Europe and potentially in Australia.
First Published on May 18, 2016 01:27 pm
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