Management Discussion and Analysis
1. Economy and Industry Outlook
Global Pharma Industry Outlook & Emerging Trends:
As the world moves forward, the global pharmaceutical industry is
poised for positive changes as expired patents pave the way for increased utilisation of
generic drugs. According to the IMF in January 2023, the global medicine market is
expected to reach USD 1.9 tn by 2027, with a projected CAGR of 3-6%. According to IQVIA,
growth in the industry will be primarily fuelled by oncology, immunology, anti-diabetics,
and obesity drugs. Oncology leads the way, with a 10-year CAGR of 15.3%, and is expected
to grow by 13-16% CAGR, reaching USD 370 bn by 2027, supported by the launch of innovative
cancer treatments. Going forward, the rising prevalence of chronic diseases is expected to
boost growth in the small molecule drug discovery market. Noteworthy advancements in small
molecule innovations are anticipated, particularly in the fields of oncology and
neurology. IQVIA also predicted loss of exclusivity (LOE) to have a significant impact
with the U.S. alone expected to face LOE of USD 141 bn by
2027, compared to USD 49 bn in the previous five years.
Small molecule expiries are estimated to decrease brand spending by USD
98 bn by 2027, more than double the impact of the preceding five years, including the
impact of high-profile products in the anticoagulants therapy area. The impact of LOE in
the five largest European markets
(Germany, France, Italy, Spain, and the UK) are expected to triple over
the next five years.
While advanced economies may experience a greater deceleration,
developing markets such as Asia-Pacific, Latin
America, India, and Africa-Middle East are expected to exhibit
significant volume growth in medicine consumption.
North America, Western Europe, and Japan may witness slower growth due
to existing higher per capita usage.
Indian pharma industry:
The Indian pharmaceutical industry is on a transformative journey of
reinvention and innovation to emerge as a leader in value. The Indian Economic Survey of
2021 reported that the Indian domestic pharmaceutical market had reached a value of USD 42
bn in 2021, and it is projected to surge further to reach USD 65 bn by 2024. Looking
ahead, the India Brand Equity Foundation (IBEF) envisions remarkable growth, estimating a
CAGR of 15%, which could propel the domestic market to reach USD 130 bn by 2030. Although
pricing pressures in the US and European markets may lead to a slight contraction of
operating profit margin, the Indian pharmaceutical industry is estimated to achieve a 6-8%
revenue growth in the coming years, supported by robust growth in domestic and emerging
markets. Factors such as an aging population, an upsurge in lifestyle diseases,
demographic shifts, and new product introductions are expected to fuel the growing market
demands. The coming years are likely to open doors of innovation opportunities and growth
avenues for the Indian pharma industry. The industrys strategic focus revolves
around quality manufacturing, drug affordability, innovation, and technological adoption,
in addition to the harmonisation of regulatory requirements with global standards. As per
a recent EY FICCI report, government initiatives, including PLI 2.0, MSME support, and
pharma clusters, along with industry-academia collaborative efforts, are expected to act
as significant catalysts for growth. Furthermore, the Indian pharma industry is committed
to meeting sustainability objectives and is investing in infrastructure for rapid drug
discovery and development capabilities to sustain its growth trajectory.
Company Overview:
Divis Laboratories Limited is a prominent manufacturer and
supplier of High-Quality APIs, and intermediates for global innovator companies. We have
established ourselves as a reliable partner to several of the worlds leading pharma
companies, including 12 of the top 20 Big Pharma. With a presence in over 100 countries,
our Generic APIs division has been instrumental in our overall success and positioned us
as the worlds largest API manufacturer in 10 of the 30 generic APIs we manufacture.
Our product portfolio includes a diverse range of APIs used in the manufacture of drugs
for therapeutic areas such as cardiovascular, anti-inflammatory, anti-cancer, and central
nervous system drugs.
Our Nutraceutical Facility at our Unit II manufacturing site is an
integrated facility for manufacturing active ingredients, finished forms of Carotenoids,
Lutein, and Vitamins. We are the primary supplier of carotenoids to several major food,
dietary supplement, and feed manufacturers worldwide. Divis is headquartered in
Hyderabad, India, and operates 2 manufacturing units equipped with state-of-the-art
utilities, environment management, and safety systems. Furthermore, we are currently in
the process of developing an additional site, which is scheduled to commence operations
next year.
We have been consistently recognised for our excellence in quality,
research and development, and occupational health and safety. In line with our commitment
to sustainability, we continuously strive to expand our production capacity while
maintaining compliance with environmental and safety regulations, as well as upholding our
social responsibility initiatives.
2.1 Manufacturing Facilities:
The Company operates at two manufacturing locations:
Unit- I, located at village Lingojigudem in Yadadri Bhuvanagiri
District near Hyderabad comprises:
the first manufacturing facility operating from the year 1995.
the DC-SEZ Unit operating from the year 2020.
Unit-II,locatedatvillageChippada,Bheemunipatnam Mandal, Visakhapatnam
District, Andhra Pradesh State comprises:
An Export Oriented Unit operating from the year 2003.
An SEZ Unit operating from the year 2006.
DSN SEZ Unit operating from the year 2011.
the DCV SEZ Unit operating from the year 2020.
All these Units have been adding production capacities and utility
infrastructure and are upgraded and modernised from time to time.
2.2 Research Centers
The Company has Research Centers called as DRC at Sanath Nagar,
Hyderabad and Process Development & Support Centres (PDSCs) at the manufacturing
sites. These centers are involved in development of processes for both new compounds and
improvement of processes for compounds on the market. PDSCs work on process development
and scale up from gram scale further through various stages of development, process
optimisation, impurity validation batches, validation of process and transfer of
technology to Plant. PDSCs also review improvement of processes and gives process support
to the Plants from time to time.
2.3 Subsidiaries
The Company has two subsidiaries M/s. Divis Laboratories (USA) Inc., in
the United States of America and M/s. Divis Laboratories Europe AG in Switzerland
for marketing its nutraceutical products and to provide a greater reach to customers
within these regions.
3. Internal Control Systems
The Company has an adequate system of internal controls commensurate
with the nature, size and complexity of its manufacturing, finance and marketing
operations including controls over financial reporting.
The company has adopted well laid down processes and procedures,
encapsulating all its operations, financial and compliance functions, for efficient and
orderly conduct of its business, adherence to the Company Policies, safeguarding its
assets, prevention and detection of frauds and errors, accuracy and completeness of the
accounting records and timely preparation of reliable financial information and compliance
with applicable statutes and rules and regulations thereunder. Appropriate review and
control mechanisms are in place for ensuring the internal control systems are operating
effectively. The internal control system is supported by qualified personnel and a
continuous programme of internal audit. The prime objective of such audits is to test the
adequacy and effectiveness of all internal control systems laid down by the management and
to suggest improvements, robustness of internal processes, policies and accounting
procedures, compliance with laws and regulations. For this purpose, a yearly audit plan
will be made with the approval of the Audit Committee of the Board of Directors.
The internal audit function, reports directly to the Audit Committee,
maintaining independence and objectivity in its function. Based on the reports of internal
audit function, respective process owners carryout corrective action in their areas. The
Audit Committee reviews the significant audit observations and status of rectification
measures thereon regularly. The Audit committee also reviews internal controls over
financial reporting and ascertain with the statutory auditors about its adequacy and
effective operation.
Based on its review and report of the statutory auditors, the internal
financial controls during the year are adequate and operating effectively. The Company
also encourages and recognises improvements in work practices. The Management duly
considers and takes appropriate action on the recommendations made by the internal
auditors, statutory auditors, and the Audit Committee.
4. Risk Management
Divis lays emphasis on risk management and has an enterprise-wide
approach to risk management, which lays emphasis on identifying and managing key
operational and strategic risks with a dynamic business continuity plan. The Company
strives to identify opportunities that enhance organisational values while managing or
mitigating risks that can adversely impact its future performance through:
Integrated process for identification, assessment and reporting;
Decentralised management of specific opportunities and risks; and
Aggregation at corporate level monitored by the Risk Management
Committee with the overall direction and control by the Board.
The Company continues its initiatives aimed at assessment and avoidance
or minimisation of various risks affecting its business and towards cost control and
efficiency across its businesses and functions, taking appropriate measures and reviewing
them from time to time. The companys risk management and control procedures involve
prioritisation and continuous assessment of these risks and devise appropriate controls,
evaluating and reviewing the control mechanism and redesigning from time to time in the
light of its effectiveness.
4.1 Global Markets
Divis is engaged in manufacture of generic APIs, custom synthesis
of active ingredients for innovator companies, other specialty chemicals and
nutraceuticals. The Company is very selective in its product portfolio with a focus on
export markets within the domain of its capabilities. As the Company has significant
exposure to export markets and hence may have impact due to global economy or changing
dynamics in the supply-chain of its products in the global markets besides any protective
actions by governments of recipient countries.
4.2 Competition
In order to stay competitive vis-a-vis its peers in Europe and US, the
Company lays great stress on leveraging its inherent skills and strengths in chemistry by
building strong customer relationships supported by cost competitive and fast delivery
structure. However, competition is inherent in the business of the Company as there are
constant efforts in process innovation and cost competitiveness. Divis continues to
work towards optimising its processes and upgrading its plant capacities and capabilities
at its multi-purpose manufacturing facilities to stay competitive and compliant to
regulations; and is also creating additional capacities addressing the anticipated or
increasing business opportunities. This would enable the Company minimise risks/ threats
and avail the opportunities that emerge for business growth.
4.3 Regulatory and Quality Compliances
The Company devotes significant importance to the regulatory
compliances as it accesses advanced markets like Europe and USA for a major part of its
business. Risks relating to regulatory compliances to such markets are inherent to the
Companys business. Divis has put in place appropriate systems, processes,
operations and procedures to monitor and ensure consistent practice for the evolving
compliance regime for market access to the recipient countries of its products and
specifications. The chemists and staff are periodically retrained so that they are fully
aware of the latest regulations, quality testing, standard operating procedures and norms.
Divis has invested in extensive training to incorporate the cGMP updates into its
operating systems. The Company constantly reviews its policies and procedures to adhere
conformity of the various global and domestic regulations for its manufacturing facilities
or statutory compliances.
4.4 Patent Compliance
From the inception of its manufacturing operations, the Company has its
stated policy of conforming to intellectual property rights (IPR) and does not violate
patents. The Company manufactures either patent-expired generics or undertakes custom
synthesis of compounds for the innovator MNC companies. Divis continually reviews
patent compliance in its process development of active ingredients and has a monitoring
mechanism to validate non-infringement of the processes developed.
4.5 Human Resources
We consider employees as an integral part of our operations and we put
in place appropriate compensation plans, feedback process, continuing training and
upgradation of skills in their functional areas. Employee relations are affable and
harmonious with safe and healthy working environment and all-round contribution and
participation in the growth.
4.6 Commercial and Financial Risks
With predominance of its exports, the Company is exposed to a wide
spectrum of risks relating to markets, legal disputes relating to contracts, various
statutory compliances, credit from suppliers or to customers or from banks/lenders,
interest rates, liquidity as well as foreign exchange rate volatility, continuity in
supply of raw materials and prices or of any sudden changes relating to trade and
regulations by countries where company does business; and addresses these appropriately to
mitigate or minimise these risks. The Company constantly reviews its systems and processes
and takes adequate measures to address these risks or meet its obligations.
The Company has significant exports, besides imports of inputs and
hence has a large exposure to exchange rate risks. Given the instability in the global,
political and economic environment and bilateral trade issues, there has been significant
volatility of foreign currency rates. Such events are outside the control or horizon of
Indian companies and it is becoming very difficult to accurately predict currency
movements. In the long run, we realise the best way to manage currency fluctuations is to
have a better geographic balance in revenue mix factoring Companys competitive
positioning, and to ensure a foreign currency match between liabilities and earnings.
The Company constantly reviews and aligns its policies and takes
appropriate decisions to minimise the commercial and financial risks.
4.7 Insurance
The Companys current and fixed assets as well as products are
adequately insured against various risks like transit, fire and allied risks, public and
product liability, personnel, directors & officers liability etc.
4.8 Environment, Health and Safety
As the Companys manufacturing operations involve complex chemical
reactions, risks exist on any issues relating to safe operations and environment
compliances. Divis policies and processes are designed and reviewed from time to
time to adhere to all applicable regulations on the environment management, employee
health and safety. Divis continually strives to optimise the resources and upgrade
its processes in order to reduce the environmental impact of its processes, products and
services, besides ensuring health and safety of employees involved in the processes.
4.9 Information Technology (IT)
The Company has put in place an IT policy in order to ensure
consistency, protection and security of data and IT systems to ensure smooth business
processes. The systems used for information security are constantly tested, continuously
updated and expanded. In addition, our employees are regularly trained on data protection
and safety including secure online banking transactions. IT-related risk management
exercise is conducted using appropriate protocols and tools.
The Company has implemented EDR (Extended Detection and Response), end
point and server protection, automated prevention and detection solutions, including
Perimeter security controls with web security tools, enhanced internal vulnerability
detection and multiple network segmentations based on business criticality. The internal
team regularly performs VAPT scan which is also reviewed by external consultants.
Implemented absolute zero trust security architecture.
4.10 Business Continuity
The Company has appropriate strategies for business continuity for
addressing disruptive events, of various nature, on business operations and has set up a
comprehensive and proactive framework to mitigate such disruptive events by deploying
available alternative solutions; and reduce their potential damages.
4.11 Sustainable Operations
As part of our efforts towards sustainable business operations, we
assess the opportunities and risks associated with sustainable sourcing/utilisation of
resources and manufacturing activity; and continually evaluate alternatives and implement
optimum processes for sustainable and safe operations in order to minimise, mitigate or
de-risk our business operations.
5. Regulatory Filings/Approvals
Divis has triple certifications ISO-9001 (Quality Systems),
ISO- 14001 (Environment Management Systems) and ISO 45001 (Occupational
Health and Safety systems) for its manufacturing facilities and adheres to cGMP and
standard operating practices in its manufacturing/operating activities and these
certifications are renewed from time to time. The Company has also obtained Food Safety
System
Certification (FSSC) 22000 for vitamins and carotenoids, GMP+B2
certification for production of Feed Ingredients
All the manufacturing sites are periodically inspected by US-FDA, EU
and other agencies.
Divis has a total of 40 drug master files (DMFs) with US-FDA, 26
CoSs (Certificates of Suitability) filed with EDQM, 26
DMFs with Health Canada and 7 DMFs with PMDA, Japan and several filings
at various other agencies. Divis has for a total of 41 patents for generic products.
6. Business Distribution
Our product portfolio comprises of two broad categories i)
GenericAPIs(ActivePharmaIngredients)andNutraceuticals and ii) Custom Synthesis of APIs and
specialty ingredients for innovator pharma giants.
The Company operates predominantly in export markets and has a broad
product portfolio under generics and custom synthesis. Among Divis well distributed
product range, some of the components of the business are given below:
Particulars |
2022-23 |
2021-22 |
| Exports |
88% |
90% |
| Imports |
45% |
46% |
| Top 5 Products |
46% |
60% |
| Top 5 Customers |
41% |
54% |
| Exports in $ terms |
86% |
88% |
| Exports in Pounds |
9% |
7% |
| Exports in Euro |
5% |
5% |
7. Performance and Operations Review
Analysis of profitability (on a standalone basis) for the current and
the last financial years is given hereunder:
Particulars |
2022-23 |
2021-22 |
| Revenue from operations |
7,62,530 |
8,87,982 |
| Other Income |
34,901 |
11,126 |
| Total Income |
7,97,431 |
8,99,108 |
| Expenditure before |
5,27,762 |
5,00,336 |
| Depreciation & Finance |
|
|
| Cost |
|
|
| PBDIT |
2,69,669 |
3,98,772 |
| Finance Cost |
52 |
65 |
| Depreciation |
34,207 |
31,055 |
| Profit before Tax (PBT) |
2,35,410 |
3,67,652 |
| Tax expense: |
|
|
| Current Tax |
43,758 |
63,720 |
| Deferred Tax |
10,837 |
9,078 |
| Profit after Tax (PAT) |
1,80,815 |
2,94,854 |
| Other Comprehensive |
233 |
218 |
| Income (net of tax) |
|
|
| Total Comprehensive |
1,81,048 |
2,95,072 |
| Income |
|
|
| Earnings per Share (EPS) |
68.11 |
111.07 |
| Basic & Diluted (C) |
|
|
During the last year (FY 2021-22), the Company had a great opportunity
to quickly develop process, gear-up and mobilise its capital infrastructure, create
capacities and produce large volumes of a product for covid-19 infection for an MNC
customer, which helped in treatment of people infected with covid-19 virus. It is a great
relief that the pandemic has since abated and people across the world are breathing normal
activity. As a result, our supplies of the product for covid-19 have also substantially
reduced during the year under review.
As the restrictions on movement of people has since eased and the
over-stocking of inventories at different levels of some of the lifestyle medicines has
also reduced, we are seeing growth of our normal business portfolio.
This financial year, the company has earned a total income of C7,97,431
lakhs, which is about 11% lower than the previous financial year. As stated above, due to
change in the product-mix, our net material consumption as a percentage of revenue for the
year is about 40%, while it was about 34% during the last financial year. Profit before
tax for the year accounted to C2,35,410 lakhs, which is significantly lower than the
previous year.
Tax expense for the year amounted to C54,595 lakhs as against a tax
expense of C72,798 lakhs. Effective tax for the year has increased over the last year due
to the changes in product mix and the resultant profitability across the companys
manufacturing units.
Profit after tax for the year amounted to C1,80,815 lakhs as against
C2,94,854 lakhs during the previous year.
7.1 Exports
Exports constituted 88% of sales revenue during the year. Exports to
advanced markets comprising Europe and America accounted for 70% of business.
7.2 Region-wise Sales Revenue
Our revenue from products and services region-wise is given below:
|
2022-23 |
2021-22 |
Particulars |
Sales revenue |
% Share |
Sales revenue |
% Share |
| Asia |
1,03,931 |
13.8% |
79,807 |
9.2% |
| Europe |
3,05,977 |
40.7% |
2,86,480 |
32.8% |
| North America |
2,20,140 |
29.3% |
3,83,291 |
44.0% |
| Rest of the World |
34,923 |
4.6% |
34,620 |
4.0% |
| (ROW) |
|
|
|
|
| India |
87,402 |
11.6% |
877,24 |
10.0% |
| Total |
7,52,373 |
100.0% |
8,71,922 |
100.0% |
7.3 Other Income
Other Income mainly comprises of interest on deposits, gain on forex
transactions and miscellaneous income. Other Income for the year amounted to C34,901 lakhs
as against C11,126 lakhs last year. This year, we have a gain on forex transactions &
translations amounting to C13,402 lakhs against a gain of C3,798 lakhs last year.
7.4 Distribution of Total Income
Cost of raw materials consumed 37% : Changes in inventories of finished
goods and work-in-progress 1% Employee benefits expenses 12% : Finance Cost 0% :
Depreciation and amortisation expenses 4%: Other Expenses 16% : Income Tax Expense 7% :
Other Comprehensive Income 0% : Total Comprehensive Income for the year 23%
7.5 Material Costs
Particulars |
FY 2022-23 |
FY 2021-22 |
| Material consumption |
2,97,949 |
3,43,979 |
| Changes in inventories of |
5,016 |
(44,999) |
| finished goods and work-in- |
|
|
| progress |
|
|
| Net Material Consumption |
3,02,965 |
2,98,980 |
| Revenue from Operations |
7,62,530 |
8,87,982 |
including other operating
revenue |
|
|
| % of consumption to |
39.7% |
33.7% |
| Revenue |
|
|
Material consumption varies from product to product. The Company
manufactures several active pharmaceutical ingredients and intermediates within the
Generic and Customs synthesis groups as well as nutraceuticals. Manufacture of any product
involves stage-wise controlled processing through its chemistry to the specifications
under the standard operating practices complying to cGMP conditions.
Material consumption net of increase/decrease in stocks is about
39.7%of revenue from operations during the year as compared to 33.7% during the last year.
Increase in net material consumption during the year is due to significant change in
product mix.
7.6 Employee Benefits Expense
Employee benefits expense represent salaries benefits to employees as
also fixed and variable managerial remuneration of Whole-time Directors as approved by the
Members.
Expenses for the year amounted to C95,305 lakhs as against C92,655
lakhs during the last year. Of this, remuneration to Whole-time Directors accounted to
C15,737 lakhs during the year as against C24,300 lakhs last year.
Employee cost for the year works out to about 12.5% of total revenue
from operations.
7.7 Other Expenses
Major items of Other Expenses are Power and Fuel, Repairs, Stores &
Spares, Packing Materials, R&D Expenses, Carriage Outward, Travelling &
Conveyance, Sales Commission, Environment Management Expenses and CSR Expenses. Other
Expenses for the year accounted for C1,29,492 lakhs as against C1,08,701 lakhs during the
last year.
Increase in Other expenses mainly relate to increase in power and fuel
costs, repairs, travel, R&D expenses and CSR Expenses.
Other Expenses account for 17% of total revenue from operations.
7.8 Capital Expenditure
During the year, we have capitalised Property, Plant and Equipment
(PPE) and Intangible Assets valuing C74,140 lakhs. Capital WIP as at the year-end amounted
to C21,188 lakhs.
A major part of the capitalisation is in the DC and DCV SEZs, besides
capacity expansion, plant upgradation and augmenting the utility/support infrastructure at
the other manufacturing facilities.
7.9 Non-current Investments:
Non-current Investments as at the end of the current year amounted to
C8,441 lakhs as against C7,937 lakhs as at the end of the last year.
7.10 Income-tax assets
Income-tax assets net of provisions, refunds and adjustments, represent
the amounts paid pending assessments and refund. Where orders have not been received for
refunds claimed in earlier years, non-current.suchamountshavebeen
7.11 Other Non-current Assets
These are mainly advances for capex programs and other receivables
being indirect tax refund claims.
7.12 Inventory position
Inventory position for the last two years is as under:
Particulars |
As on March 31, 2023 |
As on March 31, 2022 |
| Raw Materials |
94,562 |
75,476 |
| Work-in-Progress |
1,52,571 |
1,53,159 |
| Finished Goods |
11,009 |
15,437 |
| Packing Materials |
936 |
916 |
| Stores and Spares |
18,967 |
19,417 |
| Total |
2,78,045 |
2,64,405 |
The Company undertakes campaign production of large volume products
like Naproxen, Dextromethorphan and Gabapentin by running the plant at full stream and
stock these products for sale – thus freeing the multi-purpose plants for producing
other products; and hence carries significant volume of work-in-progress to be able to
service the large volume products. As the company has a good market share for these
products, we do not foresee any constraints in marketing these products and managing the
inventory cycle. We also augmented stock of raw materials to avoid any supply disruptions
and ensure continued operations. Slow moving and non-moving items have been fully provided
for.
7.13 Trade Receivables
Particulars |
As on March 31, 2023 |
As on March 31, 2022 |
| Outstanding Receivables |
1,96,502 |
2,57,062 |
| Less: Allowances for |
72 |
72 |
| doubtful debts |
|
|
| Net Receivables |
1,96,430 |
2,56,990 |
| Average receivable days |
94 |
106 |
Trade Receivables at the year end came to 1,96,430 lakhs as against
C2,56,990 lakhs last year. Trade
Receivables include an amount of 29,238 lakhs due from subsidiaries.
7.14 Other Financial Assets
These comprise security and other deposits and receivables on export
incentives and insurance claims and are in the normal course of business.
7.15 Other Current Assets
Particulars |
As on March 31, 2023 |
As on March 31, 2022 |
| Indirect Taxes- Input Tax |
13,764 |
10,054 |
| Credits |
|
|
| Prepaid Expenses |
2,644 |
2,676 |
| Advances to suppliers |
3,381 |
8,722 |
| Other receivables |
131 |
129 |
| Total |
19,920 |
21,581 |
7.16 Deferred Tax Liabilities
Deferred tax liabilities represent temporary differences arising
between the tax base of assets using the liability method, liability on account of
obligations for SEZ Units under the Income-tax Act as also of employee benefit
obligations. Deferred tax liability as of March 31, 2023 amounted to C53,721 lakhs as
against C42,140 lakhs as of March 31, 2022.
7.17 Trade Payables
Trade Payables for raw materials/services amounted to C74,264 lakhs as
at the end of the year as against
C77,130 lakhs as at the end of last year. Of the trade payables, an
amount of Rs3,749 lakhs relates to dues to micro and small enterprises. Company follows
consistent practices of procurement and avails efficient credit terms from vendors.
7.18 Other Financial and Current Liabilities
Capital Creditors at the year end amounted to Rs3,669 lakhs as against
Rs5,543 lakhs as on March 31, 2022.
Aggregate amount of other Financial Liabilities including capital
credits as at end of the year amounted to C4,339 lakhs as against C6,289 lakhs as at the
end of last year. Other Current liabilities for the current year amounted to C28,742 lakhs
as against C33,006 lakhs as at the end of the last year. All obligations are discharged as
per the terms agreed with the Vendors. Employee remuneration and all statutory dues are
paid well within the due dates.
7.19 Key Financial Ratios
Particulars |
March 31, 2023 |
March 31, 2022 |
Change |
| Return on Net |
14.82% |
28.13% |
47.32 |
| Worth/Equity (%) |
|
|
|
| Return on Capital |
18.57% |
33.85% |
(45.14%)** |
| Employed (%) |
|
|
|
| Basic EPS (C) |
68.11 |
111.07 |
(38.68%)** |
| Debtors Turnover |
3.36 |
4.09 |
17.85% |
| Inventory Turnover |
2.80 |
3.76 |
25.53% |
Particulars |
March 31, 2023 |
March 31, 2022 |
Change |
| Current ratio |
8.56 |
7.10 |
20.56% |
| Debt Equity ratio * |
0.00 |
0.00 |
- |
| Operating profit |
35.37% |
44.91% |
(21.24%) |
| margin (%) |
|
|
|
| Net profit margin |
22.67% |
32.79% |
(30.86%)** |
| (%) |
|
|
|
* There is no debt outstanding as on March 31, 2023. ** Due to
significant change in product mix in the current year as explained at para 7.0 above, the
profits and margins during the current year have substantially reduced when compared to
the previous year. This has resulted in variation in these ratios.
Detailed Explanation of Ratios: (i) Return on Net Worth/ (Equity)
Return on Net Worth/(Equity) is a measure of profitability generated to
Equity holders. It is calculated by dividing the Net profit after tax for the year with
Average Shareholders equity during the year.
(ii) Return on Capital Employed
Return on Capital Employed is a ratio that measures the efficiency of
the Company with which its capital is being employed. In other words, the ratio indicates
the ability of the Company to generate returns for both equity and debt holders. It is
calculated by dividing net operating profit (EBIT) by average capital employed i.e,
Tangible networth+total debt+deferred tax liability.
(iii) Basic EPS
Earnings Per Share is the portion of a Companys profit allocated
to each share. It serves as an indicator of a Companys profitability. It is
calculated by dividing the profit after tax for the year by weighted average number of
shares outstanding during the year.
(iv) Debtors Turnover
This ratio is used to quantify a Companys effectiveness in
collecting its receivables or money owed by customers. The ratio shows how well a Company
uses and manages the credit it extends to customers and how quickly that short-term debt
is collected. It is calculated by dividing the Total Revenue from Operations by average
trade receivables.
(v) Inventory Turnover
Inventory Turnover is the number of times a Company sells and replaces
its inventory during a period. It is calculated by dividing the Revenue from sale of goods
by average inventory.
(vi) Current Ratio
The Current Ratio is a liquidity ratio that measures a Companys
ability to pay short-term obligations or those due within one year. It is calculated by
dividing the current assets by current liabilities.
(vii) Debt Equity Ratio
The ratio is used to evaluate a Companys financial leverage. It
is a measure of the degree to which a Company is financing its operations through debt
versus wholly owned funds. It is calculated by dividing a Companys net borrowings by
its shareholders equity.
(viii) Operating Profit Margin
Operating Profit Margin is a profitability or performance ratio used to
calculate the percentage of profit a Company produces from its operations. It is
calculated by dividing the Operating Profit (PBDIT) by Revenue from
Operations.
(ix) Net Profit Margin
The net profit margin is equal to how much net income or profit is
generated as a percentage of total revenue. It is calculated by dividing the profit after
tax for the year by total revenue for the year.
7.21Cautionary Statement
This report may contain certain statements that the Company believes
are or may be considered to be ‘forward looking statements which are subject to
certain risks and uncertainties. These estimates and Judgements relating to the financial
statements have been made on a prudent and reasonable basis, in order that the statements
reflect, in a true and fair manner, the state of affairs and profits for the year. Actual
results may differ materially from those expressed or implied. Significant factors that
could influence the Companys operations include government regulations, tax regimes,
market access related regulatory compliances, patent laws and domestic and international
fiscal policies.
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