elder health care ltd share price Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS

PERSONAL CARE

The personal care products (PCP) market in India is estimated to be worth ~USD 4 bn p.a. Personal hygiene products (including bath and shower products, deodorants etc.), hair care, skin care, colour cosmetics and fragrances are the key segments of the personal care market. Each of these segments exhibits its unique trends and growth patterns. For example, the largest segment of personal hygiene products, largely dominated by bar soaps has grown at ~5% p.a. over the last five years. In comparison, the second largest segment, hair care products has seen a much higher growth of ~9.10% p.a. during the same period. The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The oral care market in India is estimated with revenues of approximately Rs 80 bn in 2013.

Mouthwash accounts for 1.5% sales of overall oral care industry.

New launches, innovation and product augmentation are many of the few motivational factors for a Personal Care companies that has the potential to increase their profitability to a greater extent. As Indian customers are becoming more global in their aspirations and desires, their appetite to consume products is also increasing.

OVER-THE-COUNTER (OTC)

The growth of the Indian over the counter or OTC market (that is advertised non prescription products) has outperformed globally. It has been observed that the global OTC market over the past eight years has grown rapidly and is expected to continue. The size of OTC Segment in India is about $3 billion with growth rate of 14-16%. Currently, India ranks 11th in terms of the OTC market size globally. This segment is forecasted to be close to $ 6.5 billion by 2016 and $14 billion by 2020.

The urban India is catching up with the concept of OTC more as compared to rural areas and reasons are the advent of technology, improving, literacy levels, increasing health awareness and high work stress levels. In fact, Indian consumers are confident about sharing healthcare responsibility, especially in case of common ailments. Considering the changing mindset and likely changes in regulatory framework, such as OTC guidelines and open distribution, it is expected that within the next ten years, India will become a major contributor to the world of OTC market. Currently, aches/pains, cough, colds, hyperacidity, minor topical infections, and indigestion are major OTC categories. Emerging categories include cuts, wounds and burns, muscle pains and sprains, diarrhea and constipation. An analytical interpretation of various data placed the focus on vitamins, cough & cold, antacids, antipyretics and NSAIDs as opportunity areas for switch in India. From the industry view point, the OTC market is one of the emerging markets with a good growth rate which could be tapped in various ways.

COLOUR AND PREMIUM COSMETICS

The Indian cosmetic market is pegged at Rs 29,000 crore ($4.5 billion). "Indias cosmetics market is reportedly growing at 15-20 percent annually, twice as fast as that of the US and European markets. The color cosmetics market is expected to witness a CAGR of more than 25% during 2013-2015. Major revenue generators for the color cosmetic market are Lipstick and Nail Enamel sub-segments. Both these segments together generate around 65% revenue in the market.

The Indian Pharmaceutical Market is valued at Rs 77,530 Crs. which is growing at the rate of 9%. The Dermatology market is valued at Rs. 4550 Crs. ranked at 9th position with 15.4% growth rate; which is higher than the IPM (9%) hence it is a very lucrative segment to operate in.

Elder operates in a Rs 2752 cr market which is growing at a very high pace of 13% growth where our major brand presence is tapping into the growing need to tap the need gaps in the available products in segments, skin & hair-care ranging from visible scarring to hypersensitivity, skin protectants, International Guideline approved Sun-screen, pigmentation and premature skin-ageing to hair care, alopecia & premature greying of hair.

Brands such as B-New brings in the concept of improving collagen turn-around, rejuvenating the collagen producing cell naturally while conditioning the skin & thus promoting new brighter youthful skin to prevent ageing & reduce wrinkles in elderly. Alonurish face cleanser & moisturizer with unique formulation brings in the concept of skin-protectant & hydrator that maintains the acid mantle of the skin to protect it from bacterial & fungal infections.Anthical is the only product in India that acts topically as an anti-allergic, anti-itch product with moisturizing effect which is also a unique product that is used in insect bites & mosquito bites internationally & that has safety in kids & pregnant mothers where oral anti-allergics are avoided. Ultraguard Sunscreen uses patented ingredients with antioxidants with its unique formulations that alone is approved by European Guidelines for Sun-protection.

Eslite-15 with SPF 15 is unique in preventing skin darkening even with visible light & UV rays through day & night – a feature missing in all skin lighteners in prescription market today.

Skin O2 capsules with its unique formulations is a must co-prescription in all skin ailments for its anti-oxidant benefit while we highlight the unique formulation specially useful in preventing & treating premature hair-loss & graying of hair by acting on the root of the condition- follicular nourishment, whereby increasing the rate of growth of hair, diameter of growing hair & prolonging the anagen phase of the hair cycle.

The potential market capture with these unique products helps patients have a complete skin & hair care & treatment module that helps not just to recover from skin & hair conditions but also builds on their good health & self-confidence; whereby we look at leadership in these specific segments in next couple of years time.