capacity utilization news_jubilant
TRANSCRIPT
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8/12/2019 Capacity Utilization News_Jubilant
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JubilantLifeSciences Q22014EarningsCall 29Oct13
Operator
Ladiesandgentlemen,gooddayandwelcometotheJubilantLifeSciencesLimitedQ2andH1FY2014EarningsConferenceCall.
Asareminder,allparticipants'lineswillbeinthelistenonlymodeandtherewillbeanopportunityforyoutoaskquestionsafter
thepresentationconcludes.().Pleasenotethatthisconferenceisbeingrecorded.I'llnowhandtheconferenceovertoMr.Ravi
AgarwalfromJubilantLifeSciences.Thankyouandovertoyou,sir.
RaviAgarwal,Head InvestorRelations
Hello and a very good evening. I am Ravi Agarwal,Head of Investor Relations at Jubilant Life Sciences.And I extend awarm
welcometoallofyouforourQ2FY'14andH1FY'14earningsconferencecall.WehaveonthecalltodayMr.ShyamS.Bhartia,our
Chairmanand
Managing
Director
and
Mr.
Hari
S.
Bhartia,
our
Co
Chairman
and
Managing
Director.
We
also
have
Mr.
R.
Sankaraiah,
ourExecutiveDirector Finance.
WewillcommencewithopeningcommentsfromMr.BhartiaontheoperatingscenarioofkeybusinessandtheoutlookforH2FY
'14.Mr.Sankaraiahwillwalkyouthroughwiththefinancialperformanceduringthequarterandhalfyearendedprevious.Atthe
endofthemanagementpresentationweshallopenthefloorforquestionsandanswers.
Beforeweproceed,Iwouldliketoremindyouthatsomeofthestatementsmadeonthecalltodaycouldbeforwardlookingin
nature and adetaileddisclaimer in this regardhasbeen included in the InvestorPresentation that has been shared onour
website.
InowinviteMr.Bhartiafirstforhisopeningremarks.
ShyamS.
Bhartia,
Executive
Chairman
of
the
Board,
Managing
Director
Thankyou,Ravi.Goodeveningtoyouall. Jubilantcontinuestoreportrobustperformance.ForQ1 forQ2FY2014,our income
fromoperationswasat1,436crores.Thisishigher,thisis17%higheronyearonyearbasis.EBITDAinthesameperiodstoodat276
croresgivingusmarginsof19.2%.Revenuesfrominternationalmarketremainanimportantcontributortotheseresults,increasing
21%andgivinga75%sharetooverallrevenues.Theregulatedmarketcontributed60%oftheoverallrevenues.ThesharesofNorth
Americastoodat39%andthatofEuropeandJapanstoodat21%.
ForH12014,I'mpleasedtonotethattheincomefromoperationsstoodatINR2,793crores,up13%onyeartoyearbasis.The
correspondingEBITDAandEBITDAmarginstoodatINR518croresand18.5%respectively.
I'lltakeyouthroughthedetaildiscussionsontheperformancebeginning thispharmaceuticalsegment. InQ2FY2014, itshowed
revenuesof691crores,up6%yearonyearandgivinga shareof48%of theoverall revenues.Similarly, inH1FY2014,wehad
revenuesofINR1,343crores,up4%yearonyear.Revenuesharewasat48%totheoverallrevenues.
TheGenericsbusinessshowedvolumegrowthdrivenbyexistingproductsscalingup.APIbusinesswitnessedstrongvolumegrowth
inkeyproductssuchasSartans.Therewasadecline inSartanpricesdueto increasedcompetitionpostpatentexpiry.Priceshave
now stabilizedandareexpected to remainat current levels.Continuouscost reduction throughprocessandyield improvement
resultedinlowercostofproduction,higheroutputandcontinuedhighmarginsinourAPIbusiness.
Wehave28commercialAPIproductsavailableinthemarket.WelaunchedRizatriptaninUSA.Wealsofiledfiveproductsduringthe
quarteracrossUSA,EuropeandAsia.AttheendofSeptember2013,thecompany'sAPIproductspipelinestoodat629fillingsacross
regionsconsidering68cumulativeDMSinUSand30cumulativeCEPsinEurope.
Soliddosesfromformulationshowedanormalizedperformancewithcontinuingvolumeimprovement.Thelowergrowthinsalesis
mainlydue toprice reduction intheMethylprednisoloneandpostponementofthreeproduct launches inUS toH2FY2014.We
continuedtomaintainaleadershippositionintheMethylprednisolone,Terazosin,LamotrigineandCyclobenzaprine.
Methylprednisoloneprices
declined
due
to
entry
of
anew
player
in
Q1
'14.
However,
prices
have
now
stabilized.
We
saw
eight
launchesmainlyEscitalopram inCanada;willpatternasHCTZ inEuropeandAmlodipine inAfricaandfiveproducts inAsiaPacific.
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Weexpectto launchfivemolecules inUS inH2 '14.There40commercialproducts inthemarketwith16 inNorthAmerica,26 in
Europeand16inrestoftheworld.
To give you an idea of the fillings,wehave filled Sartan in Europe and saw 26 new fillings in restof theworld acrossChina,
Columbia, Iraq,Malaysia,Myanmar,PeruandPhilippines.Weexpect significantgrowth in restof theworldmarketswithnew
approvals in Russia, Ukraine, UAE, Canada and Philippines. At the end of Q2, 2014, the company has total 676 filings for
formulationsinvariousregionsoftheworldcomprising:58ANDAsinUSand48DossierfilinginEurope.
Moving toSpecialtyPharmaceuticals. We sawnewcontracts totaling$25million inSterile InjectablesandOCLbusiness thereby
augmentingthepipelineofordersthatwehave.SterileInjectablesandOCLbusinesswasnegativelyaffectedwithQ1dueto inQ1
FY'14duetoturnaroundinsterileplant impactedtheproductionlossoffourweekswhichresultedinbusinessshiftintoH22014.
However,noneofthenewbusinessopportunitiesidentifiedforFY2014hadbeenlost.
OrdersinhandforexecutioninH2FY2014is$80million,30%higherthanH1FY2014.Wehaveastrongorderbookof$590
million,up 15% yearonyear. I amhappy to share that inMontreal our facility hasbeen recently reaudited and thiswas
completedsatisfactorily.Wearelookingforwardtovolumelettermatterhasbeenfullyresolvedinthenearterm.
InRadiopharmaceuticals, saleswere flat inH1 FY2014 due toproductiondelays in someof theproducts. This hasnowbeen
resolvedinSeptember'13andproductionisnownormal.AccordingtosalesinH2FY2014areexpectedtobehigherthaninH1FY
2014.
RegardingRubyfill,
we
were
successfully
accelerating
the
preapproval
evaluation
for
Rubyfill
that
was
included
as
part
of
acGMP,
whichisexpectedbytheendofQ3FY'14.
ThecurrentSPECTcardiologyUSmarketsizeis$70million,whichhasaverygoodgrowthrategoingforward.Wehaveasuperior
productwhichhasbeenfiledunder505(b)(2)andexpectsizablemarketshareinUS.WeexpecttolaunchRubyfillinUS,Canada,
Germany,SwitzerlandandIndiainFY2015.
The Life Science Ingredients segment delivered revenues of INR744 croreswithinQ3 FY 2014, representing a growth of 30%
yearonyear contribution tooverall revenues stoodat52%. InH12014, thebusiness increased [ph]24% to1,451crores from
1,172croreslastyear.
During the quarter, the PPES business witnessed very good volume growth and also better price utilization in Pyridine and
derivatives.IncreaseinendproductpriceshavestartedtohavepositiveimpactonthepricesofBetaand3CPs.
Ministryof
Commerce
Republic
of
China
has
imposed
24.6%
anti
dumping
duty
on
Pyridine
imported
from
company
for
domestic
saleinChina,forwhichthefinalorderisstillawaitedandtheimpactofthesamehasbeenchargedtofinancialresults.
Demandandthepricingremainsveryrobustforourproductsintake.Weareproducingbestinclassquality,receivedfirstorders
fromaEuropeanagromedia [ph].PlantatAcetate isyet tostabilize forachievingsizableproduction levelswhich lead to lower
revenuecomparedtoplan.
Capacityutilizationislowerduetoequipmentissuesinthefinalpurificationstep,whichisexpectedtoberesolvedbyQ4'14.Due
to lowercapacityutilization,wearenotable to recover fullcost.Expectcapacityutilization forFY '14 isabout15%,whichwill
improvesubstantiallyinFY'15.
InNutrition Ingredients,weexpect fullcapacityutilization forvitaminB3byyearend.WesawbettervitaminB3priceutilization
duringthequarter.InAnimalNutrition,welaunchedtoxinbinderinIndia.InLifeScienceChemicals,EthylAcetatesawhighersales
inexportmarket,particularlyinEuropeandAfricaandMiddleEastregions.
Wecontinuedtappingopportunities foradding twonewgeographiesandcurrentlyexport tomore than30countries.Wehave
deliveredcontinuedgrowthmomentuminrevenueandEBITDAinthefirsthalfandIwouldliketosharetheroadmapasweseeit
inthecomingsixmonths.WehavearobustpipelineinGenericsbusinessasyouallwillknow.Weestimategrowthtocomefrom
newlaunchesandentryintonewgeographies.
AroundthefortnightagoweannouncedthatwehadreceivedANDAapprovalforBupropionHydrochloride.AsperIMS,thecurrent
marketsizeofthisproduct is$580millionperannum.Weare lookingto launchingthisproduct inthepresentquarter itself.API,
similarlyhasanattractivelaunchinrowinthesecondhalf.SterileInjectablesbusinesshasregisteredseveralnewcontractwinsand
higherutilizationitwilltranslateintogrowth.
LSI segment is seeing volumemomentumand thatwill continue.We're lookingathigherutilization levels in vitamins andour
valueaddedproductsinPPES,suchasSymtetand3CP.Pricingofkeyproductisstabilizingandthebenefitsofthatwillstartdoing
intotheperformance.
OperationsideswhichIhaveoutlinedjustnowwillhelptostrengthenthebalancesheet.Wehavetargetedinmindtobringdown
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thenetdebt levelstounder2.5timesoftheEBITDA.Therestructuringwe'recarryingouthashelpedtoconsolidatethepharma
businessunderourSingaporesubsidiaryandwearelookingatoptionstoraisemoneytobringdownthelevelofindebtedness.
Iwould like todrawyourattention towards fluctuations in foreignexchange rate. resulting in robust impacton the totalcostof
importpricingaproduct.Forexample, in lastsixmonths,theUSdollarrupeeexchangeratehasfluctuatedfromahighofrupees
68.8 to the dollar, to the low of 53.66 to the dollar. Exchange rate seems now stabilized around 61 levels going forward. The
continuedstabilityintheexchangeratewillhaveapositiveimpactsontheprofitsofthecompany.
Iwould liketo inviteMr.Sankaraiahtocontinuetothediscussionswithhisthoughtsonfinancialperformanceofthecompany.
Thankyou.
R.Sankaraiah,ExecutiveDirector Finance
Thankyou,Mr.Bhartiaandthankyouallforjoiningthecallontoday.Iwillwalkyouthroughthefinancialhighlights.InQ2FY2014,
ourincomefromoperationstoodatINR1,436crores,giving17%growthyearonyear.Thiswassupportedbyvolumegrowthof11%
andexchangegainof9%fromthemomentoftherupee.TheEBITDAinQ2FY2014stoodat276croresgivingusanEBITDAmargin
of19.2%.ThereportedprofitaftertaxstoodatminusINR81crores,afterexceptional lossofINR150crores.Thenormalizedprofit
aftertaxwasINR70crorestranslatingintonormalizedEPSofINR4.37perequityorINR1.
ThePharmaceuticalsbusinessshowedincomefromoperationsofINR691crorefromINR650croreinthesameperiodlastyear.The
contributionto
overall
revenue
stood
at
48%.
The
EBITDA
from
the
segment
stood
at
175
crores,
giving
EBITDA
margin
of
25.3%.
TheLifeScienceIngredientssegmentshownincomefromoperationsofINR744crore,up30%overthelastyear.Thecontribution
totheoverallrevenuestoodat52%.TheEBITDAinthesegmentwasINR125croreandtheEBITDAmarginwasat16.8%.
ComingtoH1FY2014performance, incomefromoperationwasINR2,793crores;up13%yearonyear.Volumegrowthstoodat
11%.TheH1FY2014EBITDAwasatINR518crore.TheEBITDAmarginintheperiodstoodat18.5%.Thenormalizedprofitaftertax
wasINR128croreandthecorrespondingnormalizedEPSstoodatINR8.05perequityshareofINR1each.
InH1FY'14,thePharmaceuticals businesshadincomefromoperationof1,343crores,up4%yearonyear.Thecontributiontothe
overallrevenuewasat48%.TheEBITDAwasatINR328crores,givingEBITDAmarginof24.1%.TheLifeScienceIngredientssegment
gaveincomefromoperationsofINR1,451crore,up24%from1,172croreslastyear.Thecontributiontotheoverallrevenuestood
at52%.TheEBITDAinthesegmentwasatINR234croreandtheEBITDAmarginwasat16.1%.
I'llcome
to
discuss
on
the
balance
sheet
now.
As
on
September
30th,
2013,
our
net
debt
stood
at
3,911
crores.
Out
of
that,
longterm debt stood at INR2,784 crores and theworking capital requirements stood at 1,128 crore. Ifwe adjust the foreign
exchangedeferential,thenthenetdebtstoodat3,541crores,higherby142croressinceJune2013,mainlyduetoworkingcapital
increase.
We areon ahealthy growth trajectoryand are firmly committed tomeet tomeeting allour repayment scheduleon time
without fail.Ourblended ratesof interest stoodat5.6%combining the rateof the foreigncurrencyborrowingat4%and the
rupeeborrowingat12%.TheCapExfortheyearisprojectedatINR250croresandtheproductdevelopmentexpenditureofthe
INR95crores.TheactualspendinH1wasINR121crores;INR80croresforCapExandINR41croresforproductdevelopment.
Withtheobjectiveofconsolidatingthepharmaceuticalbusinessunderoneentityandraisemoneytoreducetheoveralldebtofthe
company,theBoardhasresolvedtotransferto itswhollyownedsubsidiary inSingapore.TheAPIanddosageformbusinessesof
JubilantLifeSciences Indiabywayofaslumpsalefora lump onagoingconcernbasisandalsopartofthesharesheldbythe
companydirectly
in
US
and
European
subsidiaries
to
enable
the
Singapore
subsidiary
toward
100%
of
the
entire
business
of
pharmaceuticals.
The consideration for the above transferof transfer is INR1,145 crore, netofdebtof INR583 crores. This is subject to the
shareholders'approvalofthecompanyandanyotherregulatoryapprovals.
JubilantPharmaLimited,Singapore,thewhollyownedsubsidiaryofJubilantLifeSciencesIndiahasreceivedapprovalfromFIPBfor
theabovetransfer.ThiswillenablethecompanytoconsolidateitsAPI,SolidDosageForm,Radiopharmaceuticals,allergenicextract,
SterileInjectablesandointmentandcreamandliquidbusinessesunderoneentitywithSingaporesubsidiary.
Wewouldliketohighlightthepromotersstakeofthecompanyhasincreasedfrom increasedto53.95%asofSeptember
30th,2013comparedtothepreviousquarterof49.04%.
Weare lookingatthesustainedoperational improvementtobedrivenbytheproduct launchesandgeographicexpansion inthe
Genericsbusiness
and
higher
capacity
utilization
of
the
Nutrition
Ingredients
and
Symtet
and
allied
3CP
capacities.
Our
Sterile
InjectablesandOCLsareshowinghigherutilizationlevelinthelightofordersinhandandthatwillcontributetotheperformanceas
well.We expect an early resolution on theMontreal facilitywarning letter.We continue towork towards proposed corporate
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actionstoraisemoney,toreducetheoveralldebtofthecompanyandgeneratetheoperatingcashflowtodothesame.
Withthosecomments,IwouldrequestthemoderatortoopenthelinesforQ&A,please.
QuestionsAndAnswers
Operator
Thankyouverymuch,sir.Ladiesandgentlemen,we'llnowbeginthequestionandanswersession.().Ourfirstquestionis
fromShubangGaroja[ph]ofSKSCapital&Research.Pleasegoahead.
UnidentifiedParticipant
Hi,goodeveningsir.Thanksfortakingmyquestion.Iwantedtounderstandthisforexlossinlittledetail.So,howmuchis,how
muchofourtotalsalesisinforexasininternational?Andwhatistheimpactofthisrupee,Imean,arewenotgettinganybenefit
ofrupeedepreciation,becausealargepartofoursalesisindollars?
R.Sankaraiah,ExecutiveDirector Finance
Ourinternationalsalesonanoverallbasisisabout75%ofthetotalsales.
UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
Andthis asfarasthedomesticsaleisconcerned,solongasithasadomesticparityandwegettheforexbenefitthereandasfar
asall
the
foreign
subsidiaries
which
are
there
outside
India
on
account
of
translation
into
Indian
rupees
on
consolidation,
we
get
the
forexbenefitontheclosingdate.
UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
Yeah.
UnidentifiedParticipant
And,so inthepresentation,actuallyIsawthatyoutalkedaboutmaintainingtheguidanceforentirefinancialyear.Imayhave
missedoutyourearlierpressreleases.So,canyoureiteratewhatwastheguidanceoftoplinegrowthandmarginforfinancial
year'14?
R.Sankaraiah,ExecutiveDirector Finance
Forfinancialyear'14wehavenotgivenanyguidance.
UnidentifiedParticipant
No,sointermsofgrowth
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R.Sankaraiah,ExecutiveDirector Finance
Specificallywehavenotgivenanyguidanceforfinancialyear.
UnidentifiedParticipant
Okay.But,whenyousaythatyouexpectabetterH2,howshouldIratethat?
R.Sankaraiah,ExecutiveDirector Finance
Yeah,theH1resultscompared theexpectedH2resultarebetterthanwhatwehavealreadydeliveredsofar.
UnidentifiedParticipant
Okay.Andthird,youtalkedabouttransferringoneofyourbusinessestoyourSingaporecompany.How is itgoingtohelpyouto
reduceyouroveralldebtlevel?
R.Sankaraiah,ExecutiveDirector Finance
Ifyouseeourearlierpressrelease,whatwe'vementionedis,wewantedtoconsolidateourentirepharmaceutical businessunder
oneentity.Now, it ispartly in JubilantLifeSciences India likeAPI,DosageFormbusiness,which is in JubilantLifeSciences India,
whereas,restofthebusinesslike,theSterileInjectables,OCLbusiness,Radiopharmaceuticals,AllergenicExtractsareallunderthe
holdingcompanySingapore.
So,whatweproposedtodo is,movingtheAPIandDosageFormbusiness from India to itswhollyownedsubsidiarySingapore,
therebytheentirepharmaceutical businesswhich isasof firsthalfyear ifyousee,48%ofthesaleswhichwillcomeunderone
entity.
UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
So,whatweproposedtodois,proposedtoraisemoneyinthatentityandacquirethisAPIandDosageFormbusinessfromIndia,
therebybringingthedollarsforthatIndia,becausewehavementioned inthespeechalsothatthevaluationofthebusiness,for
theAPIandDosageFormalongwithsomeshareholding isabout1,145crores,which isalongwiththat,that isaequity infusion
whatSingaporecompanywillinfluenceinIndiaapartfromassumingthedataofanother583crores.
So,basically thedollar loanswillmoveout from Indiaandgo to Singapore thatwill enable thedollarbalance sheet intacton
accountoffluctuationwhatweareprovidingasoftodaythemarktomarketthatforeigncurrencytranslationallthosethingswill
get
reduced
substantially.
UnidentifiedParticipant
Right.Andwhenisit yes,yes.
R.Sankaraiah,ExecutiveDirector Finance
Thatisoneobjective.Theotherobjectiveisthat,onceweconsolidatetheentirepharmaceutical businessthenwewantedtoraise
anequity inthatbusinessbydiluting.Sothat,wecan infuseadditionalequity intotheoverallsystemtoreducetheconsolidated
debtofthecompany.Thatistheobjective.
UnidentifiedParticipant
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Okay.That'sagoodstep,significantpositivestep.AndwhatisthetimeframethatyouhavewithrespecttothisSingapore
listing?
R.Sankaraiah,ExecutiveDirector Finance
We are already whatever is the required regulatory approval, one of themain regulatory approvalwhich is required is FIPB
approval,becauseitthebrownfieldtransferofbusinessofpharmaceuticaltoawhollyownedsubsidiaryoutsideIndia,weneedanFIPBapproval,whichwe,whichSingaporecompanyhasalreadygot it.That isthemainapprovalwhich isrequired.Otherwise,we
havetoraisemoneyandcompletethetransaction.Forthat,themainmilestonenowistheshareholders'approval.
UnidentifiedParticipant
Okay.AndonelastquestionifImay.So,youtalkedaboutbringingdownyournetdebttoEBITDA.
R.Sankaraiah,ExecutiveDirector Finance
Yeah.
UnidentifiedParticipant
Whatisthecurrentratioandhowdoyouplantodothat?
R.Sankaraiah,ExecutiveDirector Finance
Asoftoday,itisabout3.5timesofEBITDA.So,wewantedto oneis,throughanoperatingcashflow.Thatiswhy,ifyousee,we
havesubstantiallyreducedourcapitalexpenditure.Earlier,wewereplanningaboutmorethan300croreswhichwe'vereducedthe
capitalexpenditureto250croresandasoffirsthalfyearwehaveincurredonly80crores.
UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
So,wearehavingaverystrictcontroloncapitalexpenditureinvestment.
UnidentifiedParticipant
SoyourH1CapExisonly80crores?
R.Sankaraiah,ExecutiveDirector Finance
That'sright.
UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
Andapartfromthat,theproductdevelopmentexpenditureofanother41crore.
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UnidentifiedParticipant
Okay.
R.Sankaraiah,ExecutiveDirector Finance
So,wehaveaverystrictcontrolonthecapitalexpendituretogeneratecashandreducethedebtlevel;thatisoneobjective.Theother objective is, raise equity in the Singapore Company and bring thatmoney into India to reduce the debt of the Indian
company.
UnidentifiedParticipant
Okay.Okay,sir.Thankyousomuch.I'llgetbackifIhaveanymore.
R.Sankaraiah,ExecutiveDirector FinanceThankyou.
Operator
Thankyou.().OurnextquestionisfromSaionMukherjeeofNomura.Pleasegoahead.
SaionMukherjee,analyst
Thanksfortakingmyquestion.Sir,onethingonCapEx,youmentioned80croreastheCapExforthisthing.So,doyouexpectthis
toincreaseyou'restillstickingto250croresforthefullyear?
R.Sankaraiah,ExecutiveDirector Finance
No,250
crores
we
have
mentioned.
We
are
trying
to
do
our
level
best
to
keep
the
CapEx
as
minimum
as
possible.
SaionMukherjee,analyst
Okay.Sir,just isitpossibleforyoutosharethekindofcashflowsyouhavegeneratedinthefirsthalfofthisfiscalyear,thatis
after this120oddcroresofCapExwhereyoumentioned thatworkingcapitalalso increased.So,canyoujust tellus likepost
workingcapitalandCapEx,howmuchwouldhavebeenthecashgenerationthiswillallow?
R.Sankaraiah,ExecutiveDirector Finance
Actually,thisfirsthalfbecauseof increase inworkingcapital,becauseofcertainspecificreasonstherewasan increase inworking
capitalin
pharmaceutical
business.
So
the
cash
generation
after
meeting
the
CapEx
was
not
there.
But,
going
forward,
we
are
going
tohaveatightercontrolontheworkingcapitalandalsotightercontrolonCapEx,whichweexpecttogeneratecashoutofoperating
incomeandusethatcashtoreducethedebt.
SaionMukherjee,analyst
Andsir,whatisthekindnatureofthisworkingcapitalincreaseandwhatisthereasonbehindthis?
R.Sankaraiah,ExecutiveDirector Finance
No,thisisbecausetherearefewproductsinAPIandDosageFormbusinesswherewearesupposedtolaunchlikeMr.Bhartiahas
mentionedinhisspeech.Wearesupposedtolaunchthreeproducts fourproducts;outofthat,welaunchedonlyoneproductin
H1.So,
there
was
some
inventory
pile
up
on
account
of
that
and
also
there
was
some
receivable
pile
up
which
was
there.
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Sowhich is expected to rather that is as far as receivable is concerned, it isalready getting corrected.As far as inventory is
concerned,oncewegettheproductlaunchedinH2,thatinventoryalsoweexpecttoliquidatetherebywe'llgeneratethecashout
ofthat.
SaionMukherjee,analyst
Okay,sir.Andsir,finallyonequestiononyourH2performance.So,isit basically,ifIseethelastseveralquarters,youmustseenpricingenvironmentasnegative,Imean,pricinghasbeenadragongrowth,right?
R.Sankaraiah,ExecutiveDirector Finance
That'sright.
SaionMukherjee,analyst
Do you think that could change? And if you can, share, like, broadly the pricing trend across key business segment, likewhat
percentageincreasewehaveseen.
R.Sankaraiah,
Executive
Director
Finance
We'vementionedasfarasthemainproduct,whichisMethylprednisolone,lastquarteralsowedidmentionthis,therewasaprice
reductionwhichhashappenedabout20%comparedtothepreviousquarter previousyear,whichwe'vesharedinthebeginning
itself,whereasthereispricepressurewhichisexpectedinMethylprednisolone.Thathashappenedbecausethereisanewentrant
inthemarketinQ1.Thereby,thepricehascomedownby20%.
Apartfromthat,inSartans,inAPI,thepricewasunderpressurebecauseoftheproductwhichhasgoneoffpatentbecauseof
which,therewasnewentrantswhichwerethereinthatbusiness.
Andthethirdis,inatorvastatin,therewasapricereductioninDosageFormbusiness,becausetherewasapricereductionin
API.So, thathas thatwasa consequenceeffectwhichhashappened in theDosageFormbusinessbecauseof theAPI
reduction.So,becauseofthat,thesalevalueinDosageFormalsohascomedown.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Going forward,wedon'texpectfurtherreduction intheMethylprednisoloneand inalsoSartans.But inSartans,wecontinuously
reducingcostandwehavedoneasubstantialreduction inourcostand improvement incapacity,which bywhichweareableto
maintainhighermarginsinourSartanbusiness.
Andsimilarly,incaseofatorvastatin,thepriceswillnotgoingtogofurtherdown.Thepricesaregoingtobestablefromhereon.
SimilarlyinvitaminB3,thepriceswereincreasedinQ3aswementionedlastquarterandthepricesincreaseisstillcontinuing.
AndwehopetohavebetterrealizationinH2.
R.Sankaraiah,ExecutiveDirector Finance
IfyouseeinLifeScience
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
AndPyridinebusinessalso,again,aswehavesaidthepricesarestrong.Andthere isastrongdemandfortheproductandthe
priceshavealsogoneupandthatstillremains whichwestillgoingtoenjoyinH2.
R.Sankaraiah,ExecutiveDirector Finance
Ifyousee inLifeScience Ingredientsbusiness,wehaveshownagrowthof30%. It ismainly,about20%growthhavecomeon
accountofvolumeandonaccountpriceincreasealsowegotabout10%.
SaionMukherjee,
analyst
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Okay.Okay.
R.Sankaraiah,ExecutiveDirector Finance
That ismainlybecause thePyridinebusiness isdoing fine.Andalso theNutrition Ingredientsbusiness, thepriceescalation
whichwehavetakenthatiscontinuingandtheNutritionIngredientsbusiness,thecapacityutilizationisgoingverywellandwe
expecttohave100%capacityutilizationbyyearend.
SaionMukherjee,analyst
So,overallyouexpectsecondhalfEBITDAmargintobebetterthanwhatyou'vereportedsofar?
R.Sankaraiah,ExecutiveDirector Finance
Absolutely.
ShyamS.
Bhartia,
Executive
Chairman
of
the
Board,
Managing
Director
GainsandEBITDAmargin,both.Andwedon'texpectfurtherpricedropinIndiaforourproducts,whichwehavementioned.
R.Sankaraiah,ExecutiveDirector Finance
Therearethreereasons.One,asfarastheAPIandDosageFormisconcerned,thenewlauncheswhichweexpectthatis which
hasbeenmoved fromH1 toH2, that isexpected toget launched.Andalsonewgeographies, restof theworld,whereweare
enteringintoDosageFormbusinessisyieldingverygoodresults.
And the capacityutilization in LifeScience Ingredients,mainly inPyridine and also inNutrition Ingredients and acetyl, all three
businesses, thecapacityutilization isgoingupverywell.And theSymtet, thecapacityasof today isutilizedabout10% to12%.
Overall,theyear,weexpectabout15%forthisyearcomparedtoourearlierprojectionofabout20%,becausestilltheplantisyetto
stabilizeto
our
satisfaction.
So,
but
next
year
we
expect
Symtet
also
to
get
stabilized
and
have
ahigher
capacity
utilization.
AsfarasthepricingisconcernedinSymtet,thepricinghasimprovedverywellandthequalityoftheproductisalsoverygood.Only
thingis,thestabilityoftheplantwhichwehavetotakecarewhichisbeingaddressedveryvigorously.
SaionMukherjee,analyst
Okay.Sir,justonefinalquestiononthisamortizationofforexlossof39crores.How whatisthedurationof,tenureofthisloan
overwhichwewillbeamortizingthis?
R.Sankaraiah,ExecutiveDirector Finance
Thisis
balance
we
have
another
three
years.
It
is
afive
year
loan.
The
balance
we
have
another
three
years.
SaionMukherjee,analyst
Okay.Thankyou,sir.
R.Sankaraiah,ExecutiveDirector Finance
Thankyou.
Operator
Thank
you.
Our
next
question
is
from
Anantha
Padmanabhan
of
Canara
Robeco.
Please
go
ahead.
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8/12/2019 Capacity Utilization News_Jubilant
10/23
AnanthaPadmanabhan,Analyst
Hi.Goodevening,sir.
R.Sankaraiah,ExecutiveDirector Finance
Goodevening.
AnanthaPadmanabhan,Analyst
Couldyoutellmewhatwouldbeyournetdebtataconsorted levelafteryouhavecompleted listingordoyouhaveanyspecific
targetinmindorapostcompletionofthistransferandlistingofpharmaceutical business?
R.Sankaraiah,ExecutiveDirector Finance
Asoftoday,thetotalconsolidatedindollarterms,ifyouseeourpresentationalsowehavegiven,indollarterms,wehaveabout
$582millionindollarterms.Andinrupeeterms,wehaveabout761crores.Thetotalconsolidateddebtofthecompany isabout
$702million.
We
propose
to
raise
about
$250
million
to
$300
million
and
use
that
entire
money
to
reduce
the
debt
of
the
company
onaconsolidatedbasis.
AnanthaPadmanabhan,Analyst
Theentireamountwhichyou'llberaisingwillbeusedtoreducethedebtofthecompany?
R.Sankaraiah,ExecutiveDirector Finance
That'sright.
ShyamS.
Bhartia,
Executive
Chairman
of
the
Board,
Managing
Director
Yeah.Andonaseparatedbasis,asof
R.Sankaraiah,ExecutiveDirector FinanceLikewe'vementioned,1,145crores,thetransferofbusinesses,theSingaporecompanywillpayto Indiathat isapproximately
equaltoabout$190million.So,thatwillcomeintoIndia,thereby,Indiandebtasoftoday,thedollarIndiandebt,wewillbeina
position to reduce it to about $200million approximately. Thatwill shift the dollar debt from India to Singapore, thereby,
reducingtheforexfluctuationoftheconsolidatedbasis.
AnanthaPadmanabhan,Analyst
Okay.So,basicallyyour
R.Sankaraiah,ExecutiveDirector Finance
Andalso, interestratealsowillgodown,becauserupeerateof interestatpresentwearepaying12%,whichwillalsobepartly
replaced.
AnanthaPadmanabhan,Analyst
Okay.So,afterthetransfer,itistherupeedebtthatwouldmainlybereducing,youmeantosay?
R.Sankaraiah,ExecutiveDirector Finance
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8/12/2019 Capacity Utilization News_Jubilant
11/23
No,partlydollar,partlyrupee,but itwillbeamixofboth.But,bothatacostofdebtandalsotheoveralldebtlevelbothwill
comedown.
AnanthaPadmanabhan,Analyst
Okay.Andpostthistransition,would theratioofrupeedebtanddollardebtremainthesameorwouldtherupeedebt ratioof
rupeedebttototaldebtgoout?
R.Sankaraiah,ExecutiveDirector Finance
See,thewholeidea,actually,wearedoingthisforexfluctuationaccountingbasedontheaccountingstandardrequirement.
But,itis ifyouaskasimplequestion,isitareallossforthecompany,theansweris,simpleno.
AnanthaPadmanabhan,Analyst
Correct.
R.Sankaraiah,ExecutiveDirector Finance
Thereasonforthatiswehavemorethan$500millionexports.So,ifwedon'ttakethedollardebt,thenweareexposedtomoreof
arupeeexposure,becausethiscompany's internationalbusinessis75% includingtheexports.Sothatway, ifyouseetypicallythe
balancesheetofthecompany isadollarbalancesheet.But,becauseoftheaccountingstandardrequirementsinceallthedollar
debtistranslatedintorupee,weputthisexchangefluctuation,foreigncurrencytranslationaccountormarktomarket.
AnanthaPadmanabhan,Analyst
Correct.
R.Sankaraiah,ExecutiveDirector Finance
But,otherways,therupeeis45or52or68,wedon'thaveanymajorissueinsettlingthis,receivingthedollarsandpayingoffthedollars.
AnanthaPadmanabhan,Analyst
Correct.Okay. So,basically,post this transfer, the total exceptional itemswhichhas been causing quite a few quite abit of
fluctuationinthefinalreportednetprofit,thatwouldreducetoalargerextent?
R.Sankaraiah,ExecutiveDirector Finance
Absolutelyright,absolutelyright.
AnanthaPadmanabhan,Analyst
Okay.Thatwouldbegood.That'sallfrommyend,sir.
R.Sankaraiah,ExecutiveDirector Finance
Thankyou.
Operator
Thankyou.
Our
next
question
is
from
Praful
Bohra
of
Nirmal
Bang.
Please
go
ahead.
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8/12/2019 Capacity Utilization News_Jubilant
12/23
PrafulBohra,Analyst
Yeah,hi.Thanks.Sir,onthedilutionwhichwillhappeninSingapore,oncethelistinghappens,sirwouldtherebeanyimpactonthe
wouldtherebeanysortofdilutionintheparent,Imean,justformyunderstanding.
R.Sankaraiah,
Executive
Director
Finance
No, therewillnotbeanydilutionattheparent level.Asof today,Singaporecompany isheld100%bytheparentcompany.The
dilutionwillhappenonaccountofraisingthemoneyatSingaporelevel,whichisa100%subsidiarywillbecomedilutedsubsidiary.
PrafulBohra,Analyst
Okay.And
R.Sankaraiah,ExecutiveDirector Finance
Attheparentlevel,therewillnotbeanydilution.
PrafulBohra,
Analyst
Okay.Andso,Imeanthis,theamountwhichispaid,sorightnow,theentirePharmaceuticals andtheAPIbusiness,isitinSingapore
orImean,everythingthatpartoftheworkisbeingdone,right?
R.Sankaraiah,ExecutiveDirector Finance
Yeah.Thatisthere.Onceweraisethemoney,wewantedtocompletethetransactionaftertheshareholderapproval.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Actually,70%isalreadythereinSingapore,30%ofthebusinesswhichisthereinIndiaisbeingtransferred.
R.Sankaraiah,ExecutiveDirector Finance
AtAPIbusinesses.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
APIindustries.
PrafulBohra,Analyst
Okay.Andsir,whatstagesarewein withregardstothislisting?Imean,arewealreadyfiledfortheTRHforyourwhatstagearewein?
R.Sankaraiah,ExecutiveDirector Finance
First,ourobjectiveistoraisealoan,completethetransaction,afterthatraiseequity.Thatistheobjectiveonwhichweareworking.
PrafulBohra,Analyst
Okay.Andthiswouldtakehowmuchtime,theentireprocedure?
R.Sankaraiah,ExecutiveDirector Finance
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8/12/2019 Capacity Utilization News_Jubilant
13/23
Itshouldbe
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirectorIthinksixtosevenmonths'time.
R.Sankaraiah,
Executive
Director
Finance
Yeah.
PrafulBohra,Analyst
Sorry?
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Sixmonths'time.
PrafulBohra,Analyst
Sixmonthstime.
R.Sankaraiah,ExecutiveDirector Finance
Aboutthreemonthsfordebtandmaybesubsequentraisingofequitymaybeanotherthreetofourmonthsitdependsupon.
PrafulBohra,Analyst
So,just
three
months
debt
would
be
in
the
Singapore
entity,
right?
R.Sankaraiah,ExecutiveDirector Finance
Correct.
PrafulBohra,Analyst
Okay.Andhavewealreadytieduporarewealreadyinthefinal havetheyalreadyfinalizedthebankers?
R.Sankaraiah,ExecutiveDirector Finance
No,weareworkingwiththebankers.We'reworkingwiththebankerstoraisethisdebt.
PrafulBohra,Analyst
Sure.Okay.Andsir,justtoreconfirm,yousaidMethylprednisolonepriceshavefallenby20%yony,right?
R.Sankaraiah,ExecutiveDirector FinanceThat'sright.
Praful
Bohra,
Analyst
Tilldate.Andyoudonotexpectanymorecompetitiontoenterinhere?
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8/12/2019 Capacity Utilization News_Jubilant
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R.Sankaraiah,ExecutiveDirector Finance
That'sright.
PrafulBohra,Analyst
Okay.Andsir, the remainingdebt thatweare transferring from India toSingapore, so the Imean,just fromanaccountingperspective,thiswouldnotbeapartoftheP&LanymoreanditwoulddirectlyflowtotheBarasat,isitright?
R.Sankaraiah,ExecutiveDirector Finance
That'scorrect.
PrafulBohra,Analyst
Okay,okay.Thankyou.
R.Sankaraiah,ExecutiveDirector Finance
Thankyou.
Operator
Thankyou.().OurnextquestionisfromKrishnaKiranofICICIDirect.Pleasegoahead.
KrishnaKiran,analyst
Yeah.Thanksfortakingmyquestion.Goodevening,sir.Sir,onequestionregardingourPyridinebusiness.Canyoujustexplain
thatPyridine
China
has
imposed
anti
dumping
duty?
R.Sankaraiah,ExecutiveDirector Finance
Antidumpingdutywhichhasbeen imposed24.6%onPyridine imports from India isapplicableonly formaterialwhichhasbeen
importedbyChinafordomesticconsumption.Inourcase,itisabout60%to70%isdomesticconsumption.Whereas,ifthematerial
isusedforreexport,thatisnotapplicable.Sonetnet,wehaveaneffectononlythat60%to70%ofthematerialwhichhasbeen
exportedtoChina.
AttheMinistryofCommerce,whichhasimposedthisantidumpingduty24.6%,whichwaseffectivefromlastquarter,forwhichthis
P&Laccountwhatwehaveproducedasoftodayisfullyaccountingtheeffectofantidumping.
KrishnaKiran,analyst
Sir,what IwastryingtounderstandthatPyridinewhateversaleswhichwecloakedduringthisquarter,which isnet impactof
24.6%andincreaseintheprices?
R.Sankaraiah,ExecutiveDirector Finance
Yes.TheincreaseinpriceshavecompensatedmorethantheantidumpingdutyasoftodayinourP&L.
KrishnaKiran,analyst
Okay,sir.Okay.Andsir,secondly,howaboutRubyfill,weareexpectingaroundFY'15 launch.So,whichpartofthisyearwouldbe
thislaunchinUSaswellasinIndia?
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8/12/2019 Capacity Utilization News_Jubilant
15/23
R.Sankaraiah,ExecutiveDirector Finance
No,asfaras see,weareveryconfidentweshouldbeinapositiontolaunchinFY'15,whichpartitisverydifficultdependsupon
theclearanceby theFDAandall those things,whichwecannotcommenton.But, theprogress isgoingverywellandwe the
marketsizeof thatproduct ismore inUSabout$70millionplusCanadaandalsoweexpect it isnotonly inUS,weexpect the
producttogetlaunchedinCanada,SwitzerlandandinGermanyinFY'15.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Therealsowehavefiledforthe(inaudible).
KrishnaKiran,analyst
Sorrysir,Icouldnotgetit.
R.Sankaraiah,ExecutiveDirector Finance
Wehave
filed
the
registration
of
the
product
already
in
those
locations
also
which
we
expect
to
launch.
KrishnaKiran,analyst
Okay,okay.Fine.And sir, regarding there isanarticle twodaysback in someof themagazinestating thatwearegoing to
expandourformulationcapacitybothinIndiaandabroad.So,butduringthiscallyousaidwewillbespendingonly250crore.Can
youjustclarifymoreonthat?
R.Sankaraiah,ExecutiveDirector Finance
That 250 crores including expansion of capacity of packaging line in US and also the formulation capacity which we already
expandedinthefirsthalfinourRoorkeefacility.
KrishnaKiran,analystOkay.So,this250crorewhichisnetofalltheexpansions?
R.Sankaraiah,ExecutiveDirector Finance
Yeah,afterincludingalltheexpansions,yes.
KrishnaKiran,analyst
Okay,okay.
And
R.Sankaraiah,ExecutiveDirector Finance
Itincludesalltheexpansions.
KrishnaKiran,analyst
Okay.Fine.Andsir,comingbacktoyourpharmacy sorry,pharmasegmentbusiness,marginsweretypicallyslowly it is inthe
rangeof24to25andtypicallyweusedtocloakitbeforearoundmore28%,29%.So,nowthepricefallinoneofourkeyproductis
stabilized.Soand goingahead,we'regoingtolaunchnumberofproductsacrosstheglobe.So,whatkindofmarginimprovement
wecanseeinthepharmacybusiness?
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8/12/2019 Capacity Utilization News_Jubilant
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R.Sankaraiah,ExecutiveDirector Finance
Weshouldexpectintherangeof25to27thatrangeinthepharmaceuticalbusiness.
KrishnaKiran,analyst
Okay.Andoverallbusiness,anyguidance,sir,marginguidance?
R.Sankaraiah,ExecutiveDirector Finance
Overallbusiness,wehavenotgivenguidance.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
But,aswehavesaid,H2isgoingtobebetter,muchbetterthanH1.
KrishnaKiran,
analyst
Okay.Andsir,howmuchpartofyourrawmaterialcostisforex,Imean,theinput?
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
See,that'sagoodquestion.Wedon'thavethefiguresavailablewithusnow.
R.Sankaraiah,ExecutiveDirector Finance
Ifyouseetherawmaterialconsumption, itisabout40%.Inthe 40%tothosesales.Outofthat,theimportsversusdomestic
dependsuponthe mainlyitwillvarybasedonwhetherwearebuyingalcoholdomesticallyorimportingfromBrazil.
KrishnaKiran,analyst
Okay.
R.Sankaraiah,ExecutiveDirector Finance
So, it is verydifficult toexactly say,whichever see,after computing thenet importprice versusdomesticprice,whichever is
better,wegobythat.Itisnotexactlyimportversusthedomestic,thisthing.So,netnet,whicheverismorecostadvantageoustous
forimportofalcoholordomesticpurchase,wedothat.So,thatiswhywearenotabletoexactlyquantify.Forexample,lastyear,if
youtake,itisabout15%isimport,thebalanceisdomestic,likethat.
KrishnaKiran,analyst
Okay.Okay.Andsir, lastly,justforclarification,duringthiscall,Imean,IjustwanttocheckwhetherIheardsomethingrightor
wrong.Weareplanningtoraise$250millionto$300millionthroughdilutingstake inpharmacybusiness, isthisright sorry,
pharmasegment?
R.Sankaraiah,ExecutiveDirector Finance
Yeah,inoneofthesubsidiarieswhichisinSingapore.
Krishna
Kiran,
analyst
Okay.Fine,sir.Thanksverymuch.
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8/12/2019 Capacity Utilization News_Jubilant
17/23
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8/12/2019 Capacity Utilization News_Jubilant
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soliddosageside.Andthiswillstrategicallygiveusmuchhigherreturns inthe futureand increaseourmargins.So, ifyou talk
aboutstrategy,wehavegoneintovalueaddedproducts,goneintosizeswhichareglobal,whichisgivingusglobalstatusalsoas
numberoneortwo.
So,Ithinkthat'swhereifyoulookatJubilantLifeSciencesasastrategy,isrightnow.
ParasAdenwala,
Analyst
Intermsofyoursizeofinvestmentsinthetwoareasthatyoumentioned,asapercentagetogrossblock,whatwouldbetheamount
orwhatwouldbethepercentagelike?
R.Sankaraiah,ExecutiveDirector Finance
Itisabout11%to12%.
ParasAdenwala,Analyst
This11%to12%investmentingrossblockledtoallthisdeclineinthebusiness?
R.Sankaraiah,ExecutiveDirector Finance
Yeah.Because,ifyouseethetotalgrossblock,itisabout5,800crores.So,outofthat,thereisahugegoodwillwhichisthere.
ParasAdenwala,Analyst
Okay.
R.Sankaraiah,ExecutiveDirector Finance
becauseoftheacquisitions.So,ifyousee ifyouremovethegoodwill,itisabout3,800croreisthenetblockwhichisthereasof
todaywhichwearecarrying.
ParasAdenwala,Analyst
Okay.So,ofthenetofgoodwill,outofthe3,800crores,youhaveabout500croreswhichcomesin whichwasdedicatedfor
thistwoinvestments,right?
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Yeah.
R.Sankaraiah,ExecutiveDirector Finance
Yeah.
ParasAdenwala,AnalystOkay.Alright.So,withthistwobusinesseskindofturningaround,doyouthinkyoucangobacktoyourreturnoncapitalemployed
thatweenjoyedin2008ofabout18%to19%?
R.Sankaraiah,ExecutiveDirector Finance
Definitely.
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8/12/2019 Capacity Utilization News_Jubilant
19/23
ParasAdenwala,Analyst
Andinwhatperiodoftime?
R.Sankaraiah,ExecutiveDirector Finance
ByFY'15,weshouldbethere.
UnidentifiedParticipant
FY'15?
R.Sankaraiah,ExecutiveDirector Finance
Yeah.
ParasAdenwala,
Analyst
Okay.
R.Sankaraiah,ExecutiveDirector Finance
'15endweshouldbethere.
ParasAdenwala,Analyst
That'sa
R.Sankaraiah,ExecutiveDirector Finance
Because thewholethingisthatSymtetwhichneedtobestabilized,afterthat,Ithinkwearethere.
ParasAdenwala,Analyst
Okay.
R.Sankaraiah,ExecutiveDirector Finance'15,actuallywementionedthat'15,thatwillbeasizablecapacityutilization.So,weshould asoftoday,ifyousee,itisintherange
ofabout12%whichisexpectedtogotomaybeanother2%,3%.Intwoyears'time,weshouldbetheretheoldlevelof18%to19%.
ParasAdenwala,Analyst
Okay.Andwhatpercentageofyourbusinesswouldyousayisvalueaddedandpredictableandhowmuchiskindofcommodity
kindofbusiness?
R.Sankaraiah,ExecutiveDirector Finance
No,andalsoonemore whenwetalkedaboutallthisROCEnumbersandallthosethings,itisdefinitelynotaguidance,itis
justanindicative.
ParasAdenwala,
Analyst
-
8/12/2019 Capacity Utilization News_Jubilant
20/23
Sure.Iappreciatethat.Sure.
R.Sankaraiah,ExecutiveDirector Finance
Yeah.
ParasAdenwala,Analyst
But,asacompany,Iamsureyourrecenttarget
R.Sankaraiah,ExecutiveDirector Finance
Ratherthecompanywishestogettothatlevel,becausewemadetheinvestment,we'vewaitedenoughtimeforharvesting
thatinvestment.So,thatistheobjectiveonwhichwehaveinvested,wewantedtobethere.
ParasAdenwala,Analyst
Okay.Sure.Andwhatpercentageofyourbusiness iscommoditykindofbusiness,wherethereistoomuchofpricefluctuationandthereislowpredictability?
R.Sankaraiah,ExecutiveDirector Finance
LifeScienceChemicalsbusiness,whichisabout1,100crores,1,200croresbusinessiscommodity.Restofthethings,Idon'tthinkitis
acommodity,becauseithasacustomizedrequirementsoritisapharmaceutical oritisNutritionIngredients.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
ButinLifeScienceChemicalsalsoweareleadingplayers,top10producersofbothEthylAcetateandAceticAnhydridein
theworld.
R.Sankaraiah,ExecutiveDirector Finance
Andyouknow
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Andwe'reexportingtomorethan35countries.So,wehaveaveryexcellentpositionindiversemarketbase.
ParasAdenwala,Analyst
Sure.
R.Sankaraiah,ExecutiveDirector Finance
Andyou'llbeknowingthateventheAceticAnhydridewhichisusedforparacetamolandaspirinmanufacturingpredominantlyand
EthylAcetatewhichisusedbythepharmaceuticalbusinessesforasasolvent.So,therealsoitisyes,bythenatureofthebusiness,
itiscommodity,butitismoreofaspecializedutilizationwherewearein.
ParasAdenwala,Analyst
So,withsameamountofcertainty,youcansaythatsinceatleast70%ofyourbusinessispredictable.Youshouldbeabletokindof
seeyourselfintothefutureforthenexttwotothreeyears,right?
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8/12/2019 Capacity Utilization News_Jubilant
21/23
R.Sankaraiah,ExecutiveDirector Finance
Yes.
ParasAdenwala,Analyst
Okay.Allright.You'vementionedaboutthisproductcalledMethylprednisolone,whatpercentageofyourbusiness isthat inthatproduct?
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
See,productwisebusinessinformationwedon'tgive.Eachproductwisehowmuchitcoststhetotalsales,wetrytoavoid
R.Sankaraiah,ExecutiveDirector Finance
Profitabilitywise,ithasverygoodprofitability.Wehadapriceerosion,butitisalreadystabilized.So,wedon'tseeanymoreprice
erosionthere.
ParasAdenwala,AnalystOkay.ButIamsureitmustbemeaningful,becausethatiscertainlyhamperingyourprofitability.
R.Sankaraiah,ExecutiveDirector Finance
Itisoneofthemainproductsforus.
ParasAdenwala,Analyst
Okay.
R.Sankaraiah,ExecutiveDirector Finance
Itisnotthemainproduct,itisoneofthemainproducts.
ParasAdenwala,Analyst
Okay.And finally, this Iam trying tounderstand the rationalebehindyourSingapore listingand transferofbusiness.So,what
you'reactuallytransferringisjust30%ofyourbusinessinIndiatoyourSingaporeentityandyou'regoingtobelistingitoverthere
andyou'replanningtoraiseabout$150millionto$300million.So,what isthevaluethatyou'reascribingtothepharmaceutical
business?
R.Sankaraiah,ExecutiveDirector Finance
We'llnotbeinapositiontocommentonthatatall.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
We'llnotliketomakeanyspeculativecommentonthat.
ParasAdenwala,Analyst
Okay.No.
Okay,
let
me
just
kind
of
ask
you,
since
Iam
sure
you
would
have
done
your
research
in
terms
of
the
valuation
of
variouspharmaceuticalcompaniesinSingaporeexchange.So,whatarethenormalmarketcaptosaleskindofmultiplesand
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8/12/2019 Capacity Utilization News_Jubilant
22/23
R.Sankaraiah,ExecutiveDirector Finance
No,wedon'twanttotalkonthatatall.Wecan't.
ParasAdenwala,Analyst
Isee.Okay.And,lookingatyourdebtlevelsandall,doyouthinkyoucanverycomfortablyraise$250millionto$300million?
R.Sankaraiah,ExecutiveDirector FinanceWeareverycomfortable,yes.
ParasAdenwala,Analyst
Butyoudidmentionthatyou beforeyoudothat,youarelikelytoincreaseyourdebt,you'regoingforsomemoredebtright
now,whichisgoingtobeshortterminnature.Sohowmuchwouldthat
ShyamS.
Bhartia,
Executive
Chairman
of
the
Board,
Managing
Director
Netdebtwillbesame.
R.Sankaraiah,ExecutiveDirector Finance
Theyarenot increasingthedebt,weare increasingthedebt intheSingaporesubsidiaryandbringingthatmoneyto Indiato
reducetheIndianForeigncurrencydebt
ParasAdenwala,Analyst
So,consolidated,it'snotreallyincreased?
R.Sankaraiah,ExecutiveDirector Finance
Itwillnotincreaseatall.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Itwillnotgoup.
ParasAdenwala,Analyst
Okay.Alright.
Ithink
that's
pretty
much
it.
Isincerely
hope
that
you
can
really
you're
successfully
in
your
efforts
and
we
can
you
getthevaluationthatyoureallydeserve.
R.Sankaraiah,ExecutiveDirector Finance
Thankyouverymuch.
ParasAdenwala,Analyst
Thankyou.
Operator
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8/12/2019 Capacity Utilization News_Jubilant
23/23
Thankyou.Ladiesandgentlemen,thatwasourlastquestion.InowhandthefloorbacktoMr.Bhartiaforclosingcomments.
ShyamS.Bhartia,ExecutiveChairmanoftheBoard,ManagingDirector
Thankyousomuch.AndIwould liketothankyouallforjoininginthisconferenceandwishyouallaveryhappyDiwali.Thank
you.
Operator
Thankyouverymuch.Ladiesandgentlemen,onbehalfof JubilantLifeSciencesLimited, thatconcludes thisconference.
Thankyouforjoiningusandyoumaynowdisconnectyourlines.