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BDH Industries Ltd Management Discussions

Jul 22, 2024|10:27:00 AM

BDH Industries Ltd Share Price Management Discussions


Industry Structure and Developments

The financial year 2022-23 has witnessed conflict between Russia & Ukraine, rising inflation, volatile commodity prices and supply chain shortages creating stress in the overall economic environment. These challenges as outlined above are resulting in structural shifts and several transitions. The Indian economy remained resilient during the year 2022-23 despite inflationary stress and slowdown in advanced economies of the world. The Indias GDP growth is registered at 7% in FY 2022-23 underpinned by the Governments capital outlay and buoyant private consumption. The pharmaceutical industry will continue to have a significant impact on the economy both in terms of contribution to GDP and employment. Over the longer term, favorable policy initiatives including significant investments in infrastructure called out in the Union Budget, the new PLI schemes to accelerate investments by the private sector, forward looking logistic & foreign trade policies and recently announced gas pricing guidelines are expected to further encourage the growth in coming years.

The Government of India under Pradhan Mantri Janaushadi Pariyojana provides quality generic medicines at affordable prices to all through Janaushadhi Kendras reducing the out of pocket expenses in healthcare. Further the Government is promoting the Production Linked Incentive Scheme to boost domestic manufacturing of Key Starting Materials (KSM), Active Pharmaceutical Ingredients (API), bulk drugs in order to attain self-reliance and reduce import dependence and encouraging Medical Devices Parks under its Make in India initiative for easy access to standard testing facilities, reduction in manufacturing cost and value addition in domestic medical device industry. As announced in the Union Budget 2023, the Government of India plans to set up labs for promoting research and innovation in pharmaceuticals.


Indian pharmaceutical industry is a major global player being worlds third largest producer by volume and fourteenth largest producer by value. The Indian pharma industry has grown at a compounded annual growth rate of 11% approximately in the domestic market over last two decades with valuation at USD 49 billion. The industry continues to grow through volume while costs remain low and focus on generics. India is largest provider of generic medicines accounting for 20% of worldwide supply by volume and worlds leading vaccine manufacturer.

Spending and volume growth will follow diverging trends by region, with larger established markets growing more slowly and pharmerging markets growing both in volume and spending. The indian pharmaceutical industry is working to fulfill the countrys healthcare demands while also expanding its global footprints. Further with increased life expectancy and a growing segments of elderly population in India, healthy aging is emerging as a larger area of focus.

The key trends in the Indian Pharma industry are - changing government & regulatory landscape, shifting industry dynamics in form of increasing investments in India by global players resulting in shift from competitive to collaborative mindset, emergence on new go-to- market models by managing various channels along the lines of FMCG empowering physicians, patients and pharmacists and digital transformation by investing in data and analytics capabilities to remain agile. Considered one of the high-growth markets, many multinational pharma corporations are looking at India as an alternative to China.

Increasing per capita income, growing penetration of health insurance, government thrust on improving penetration of modern and cost effective medicines into rural areas and accelerating access of pharmaceutical products to the poor and low-income sections of population, increased incidence of chronic ailments due to changing lifestyle, longer life expectancy and improvement in healthcare awareness are the growth enablers for the Indian pharmaceutical industry. India has a large pool of scientists and engineers having potential to steer the pharmaceutical industry to greater heights.

With the varied range of medicines available for exports, largest number of approved manufacturing facilities, improvement in medical infrastructure and jump in penetration of health insurance in the country, the long term outlook for Indian pharmaceutical industry remains largely positive subject to disruptions emerging due to geopolitical issues.

Opportunities, Risks and Concerns

Indias pharmaceutical industry beholds the growing consensus among businesses over providing new innovative therapies to patients and is estimated to touch USD 130 billion in value by end of 2030 to become leading provider of medicines to the world. New medicines and medical devices are being constantly developed making meaningful difference for patients which are approved and marketed resulting in significant market growth. Adult vaccination is in a nascent stage in India with a large potential for growth as healthy aging is new area of focus.

Oncology, immunology, neurology and adult vaccinations are the fastest growing therapy segments. India is truly recognized as the pharmacy of the world providing essential medicines at low cost to countries across the globe. The pharmaceutical industry is highly regulated and influenced by the healthcare reforms, pricing regime, rising competition and challenging regulatory landscape with increased scrutiny.

Ongoing geopolitical issues have led to supply chain disruptions and rising cost of raw materials. Your company regularly assesses its product portfolio to make it more diversified with focus on operational efficiencies to control costs. However, poor public healthcare funding and infrastructure, low per capita consumption of medicines in emerging economies including India, currency fluctuations, geo-political conflicts, regulatory issues, government mandated price control, inflation and resultant all round increase in input costs are a few causes of concern. During the year, there was no change in the nature of Companys business.

Financial Performance and Operations Review

During the financial year 2022-23 under report the Company registered a total income of Rs. 7529.81 lakhs as against Rs. 7027.59 Lakhs in 2021-22 registering a growth of 7% over previous year. Export Sales in the financial year 2022-23 are Rs. 4146.91 lakhs as compared to Rs. 3873.98 lakhs in the financial year 2021-22. In the financial year 2022-23 the Company achieved Domestic Sales of Rs. 3298.80 lakhs as compared to Rs. 3065.43 lakhs in financial year 2021-22. The operations have resulted in a net profit of Rs. 820.48 lakhs during the year 2022-23 under report as against Rs. 722.31 lakhs registering a growth of 13% over the previous financial year 2021-22.

Key Financial Ratios

As per Schedule V read with Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, details of significant changes i.e. change of 25% or more as compared to the immediately previous financial year in Key Financial Ratios are given below :-


31s* March 2023 31st March 2022 Change in %

Explanation for change of 25% of more

Debtors Turnover Ratio

4.78 4.67 2%


Inventory Turnover Ratio

10.73 11.43 (6%)


Interest Coverage Ratio

71.09 41.41 71%

Decrease in interest expenses

Current Ratio

2.46 2.51 (2%)


Debt Equity Ratio

0.09 0.05 80%

Increase in debt

Operating Profit Margin (%)

13.95% 12.17% 15%


Net Profit Margin (%)

10.90% 10.28% 6%


Return on Net worth (%)

15.89% 15.76% 0.8%


Internal Control Systems and its adequacy

The Company has adequate internal control systems including suitable monitoring procedures commensurate with its size and nature of business. The internal control systems provide for well-defined and documented policies, guidelines, authorizations and approval procedures and ensure optimum use and protection of resources and compliance with policies and procedures. The Company has a well- defined system of management reporting and periodic review of business to ensure timely decision-making. The Company endeavors to review and update these as an ongoing practice.

Human Resources

The human resource plays a vital role in the growth and success of an organization. The Company recruits, develops and employs suitably qualified, capable and experienced personnel, as per requirement. The Company has maintained cordial and harmonious relations with all employees. The Company deputes employees for training, development workshops and seminars to improve the operational performance of individuals. The Company has Reward and Recognition Programme. The Company has 116 permanent employees as on 31st March, 2023.

Cautionary Statement

Certain Statements in the Management Discussion and Analysis section may be forward looking within the meaning of applicable laws and regulations. Many factors may affect the actual results including competition, price realization, currency fluctuations, regulatory issues, evolving COVID-19 pandemic situations, changes in government policies and regulations, tax regimes, economic development within India and countries in which the Company conducts business and other incidental factors.

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