Manish Gupta, CEO of Sequent Scientific discusses company‘s margin expansion plans and outlook.
Sequent Scientific reported a consolidated total income from operations of Rs 158.58 crore for the quarter ended September.
In an interview to CNBC-TV18, Manish Gupta, CEO of the company discusses the company’s plans to improve margins and the overall business outlook. He says money from the qualified institutional placement (QIP) has been earmarked for acquisitions
Below is the transcript of Manish Gupta’s interview with CNBC-TV18\\'s Nigel D'Souza and Reema Tendulkar.
Nigel: If you just take a look at it the topline look quite good. There was a good surge in revenue. Could you give us some details in terms of what was your sales mix and also you all have done a couple of acquisitions. So, what was the inorganic part of this topline?
A: Fundamentally this quarter has been significant quarter as we had made some strategic progress as also operational progress. At a strategic level we completed the acquisition of Lyka's animal health business which helps us build on the cattle part of the cattle part of the business which is certainly the more lucrative part of the business.
That business on its own has grown 43 percent for us in the first half. Our Turkish facility got European Good Manufacturing Practices (UGMP) approval under the new guidelines and we are also fully operationalised the Vizag facility which is a dedicated facility for veterinary active pharmaceutical ingredients (APIs).
On the operational front the 47 percent growth is driven by both the veterinary business, the Alivira business as also the human API business and currently our product mix, our business mix continues to be 50:50. None of these growth have come from inorganic acquisitions because Lyka business is getting consolidated only from October 1.
Reema: In the coming quarter what would be the contribution from the Lyka business in the coming two quarters?
A: Lyka by itself is only about Rs 30 crore business. So, it will only add about Rs 15 crore in the second half.
Nigel: Provet’s business is already been accounted in these numbers?
A: That is correct.
Reema: Could you help us with what the consolidated margins of the company will look like in the coming two quarters?
A: Currently, we are running at 13 percent which is a big shift vis-à-vis the last year wherein in some of the quarters we even had negative EBITDA margins. However, having said that, we will continue to maintain or slightly grow this EBITDA margins. We do not expect a significant jump because our research and development (R&D) investments are ramping up significantly.
Nigel: There is a considerable amount of ramp up that is happening as you mentioned, what is your target for this year and I believe in FY18 you had a target of more than a Rs 1,000 crore. Are you on course to do that and how will you do that, more inorganic growth?
A: We have strengthened our balance sheet in the earlier part of the year when we raise qualified institutional placement (QIP) money. That clearly will be put to good use in the next two quarters. We are well on track on achieving our targets for FY18.
Reema: You said you are planning to use the QIP money to good use. Could you help us with how you are planning to utilise it?
A: I won’t be able to give significant details but clearly that money is earmark for inorganic growth and that is something we are working on. We do foresee some significant utilisation of that money going forward.
Nigel: I just took that number offhand the Rs 1,000 crore in FY18. What exactly is your target both on the topline as well as margins I believe you have some margin expansion plans as well?
A: Let me put it this way, we are in a discovery phase as far as our company is concerned.
Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
First Published on Oct 30, 2015 01:51 pm