J B Chemicals & Pharmaceuticals Ltd Management Discussions.


The domestic formulations industry at sales of over Rs.156,797 crores (IQVIA, March, MAT 2021) achieved value growth of 4%. The market continues to show intense competition with an increased number of brands being launched in the market.


Domestic Business:

The Company is engaged in only one segment viz. pharmaceuticals.

The domestic formulations industry has been expanding in a secular manner over several years and the outlook remains positive in view of the expansion in the economy, increased spending on healthcare and improving lifestyles in the country. While India has historically been a market dominated by acute therapies, the trend has been shifting to a larger contribution from chronic drugs in the consumption base. As per IQVIA IMS data, the share of chronic therapies in the Indian pharmaceutical market has expanded from 31% to 36% in the period between FY2013 and FY2021. This is in line with the trend in several global economies that have seen a larger incidence of lifestyle diseases on the back of improved diagnosis and better compliance by patients. Increasingly sedentary lifestyles, transitioning dietary habits, more obesity and stress at the workplace also contribute to this trend. Thus, chronic therapy segments could be expected to maintain outperformance within the overall formulations mix over several years to come. Brand building, new products introductions, product awareness programmes and penetration in Tier II and Tier III markets will remain growth enablers.

For the Company, the domestic formulations business remains a key focus area and it has been consistently growing at better than industry growth rate over the last several years. For instance, in FY21, the Company grew at 20% in its covered markets, which was twice the industry growth rate. Its growth exceeded that of all the other leading companies in India, driven by the continuing success of the strong brands portfolio. During this period, its overall rank in the Indian pharmaceuticals market improved from #32 to #28.

Within the chronic therapies space, the Indian market has a significant contribution from cardiac and anti-diabetes segments therapies and the Company has strong brands in these segments as well as plans for further expansion in core and adjacent therapies. The Company has placed aggressive focus on India Business and has implemented a new "Go-to-Market" strategy that aims at higher growth and enhanced productivity by expanding the product portfolio of top brands, entering into progressive and complementary therapeutic segments such as Pediatrics, Respiratory, Gastro and Nephrology. The focus will also be on sales force automation with increased in-clinic effectiveness of the sales force to drive visibility with prescribers/specialists. These initiatives are expected to be implemented while leveraging the existing front-ended marketing investments with productivity improvements. In view of the positive long-term growth prospects offered by the domestic industry and the Company’s strengths and focus in this business, the Company believes it has the potential to deliver long-term outperformance.

During the year, domestic formulations business registered revenues of Rs.839.07 crores, growing at 14.1%. While outperforming industry growth, the Company benefited from therapy focused divisions coupled with wide market coverage, backed by investments in technology and training. The Company’s field force as at the year-end had a strength of more than 2,100 medical representatives and supervisors, creating strong visibility for its products.

The Company’s leading brands Cilacar (calcium channel blocker), Rantac (anti-peptic ulcerant), Nicardia (calcium channel blocker), Metrogyl (amoebicide) and Cilacar-T (calcium channel blocker/ angiotensin receptor blocker) continued to strongly grow during the year. These brands feature in top 125 brands in unit terms (IQVIA, March, 2021) and top 250 brands in value terms and are ranked #1 or #2 in their respective segments. The Company’s cardiac and gastro-intestinal range of products achieved growth of 46.1% and 42.7% respectively. During the year, the Company launched ten new products across angiotensin receptor blocker, anti-diabetic, calcium channel blocker, hypotensive, anti-peptic ulcerant, anti-viral and anti-parasitic segments, which have shown good traction in the market.

Contrast media products sales at Rs.52.83 crores were 14% lower over the previous year due to the impact of COVID-19 as many hospitals were converted to treat COVID-19 patients and a majority of the hospitals deferred planned procedures/surgeries.

Going forward, the Company has outlined the key priorities that will shape its India business. One, the focus will be on strengthening its position in core chronic therapies such as cardio metabolic, including hypertension and diabetes, through new launches. Two, the Company will seek to expand into synergetic therapies by utilizing the existing field force and prescriber network. Three, improved operating leverage is expected from better resource effectiveness driven by investments in digital/automation. Four, the Company will look to expand the distribution of some of its bigger brands beyond Tier 1/Tier 2 towns. Finally, new partnerships will be core to the Company’s growth prospects, furthering its prospects in core therapy areas.

International Business:

The Company operates distinct operating models across multiple international businesses with direct presence in Russia and South Africa as well as distributor relationships in the U.S. and a large number of markets across Asia, Africa and Latin America. The Company also has a leading global position in the contract manufacturing (CMO) market driven by marquee client relationships. These businesses are backed by wide-ranging manufacturing capabilities that offer substantial headroom for growth. Overall, the Company’s international business derives strong visibility from its wide geographical presence, increased focus on ANDA filings, new product introductions in home markets of Russia and South Africa, focus on lucrative contract manufacturing business backed by state-of-the-art manufacturing facilities that are approved by regulatory bodies such as US FDA, TGA Australia, EU GMP, SAHPRA South Africa, MoH-Russia, Ukraine (PICs), MoH Japan with a wide range of products across injectables, solids and semi-solids.

The Company’s overall consolidated formulations exports during the year at Rs.1,007.01 crores were 19.1% higher over the previous year.

Despite many markets in the Rest of the World business (other than Russia-CIS) remaining subdued due to COVID-19, exports to these markets delivered revenues of Rs.565.04 crores and achieved robust growth of 24.8% on the back of strong growth of 63% delivered by the U.S. market. The Company holds 19 ANDAs and 2 ANDAs are pending approval by US FDA. Exports to CIS-Ukraine markets at consolidated sales of Rs.68.44 crores achieved marginal growth of 1.3%.

API business with sales of Rs.81.79 crores achieved good growth of 17.7%. Sales of Russian subsidiary at Rs.61.66 crores were 13.5% lower due to COVID-19 conditions in the local market as well as weakness in demand in the cough and cold segment, which is a sizeable part of the Company’s products portfolio. Sales of the South African subsidiary at Rs.218.43 crores achieved growth of 28.1% due to higher tender business.

The Company has developed a strategic blue print for the next level growth in the international business that includes ramping up of ANDA filings over medium term and selective backward integration in US business and deeper penetration in the other markets of RoW business, expansion of OTC presence and launch of new products in Russia-CIS business and expansion of public market business through portfolio augmentation and expansion of base in private market business in South Africa.

The Company perceives currency volatility, increased competition in generics business, price erosion and changing regulatory environment as a major concern in the international business. However, the Company is hopeful of growing its international business in view of the discussed growth initiatives.


In view of the positive business outlook both in domestic and international markets that is backed by a state-of-the-art manufacturing infrastructure, strong products portfolio with high growth brands, improving marketing capability and a strong balance sheet, the Company is positioned for growth and organizational improvements on a variety of parameters. The key objective is to sustain the historical trend of industry-leading growth while re-investing operating accruals into new initiatives, expanding focus on R&D and maintaining availability of infrastructure and other resources. Overall, the Company will drive continuous value accretion for all its key stakeholders by executing on its strategic initiatives.


The Company does not perceive any risks or concerns other than those that are common to the industry such as regulatory risks, exchange risk, cyber risks and other commercial and business related risks.


The Company has an adequate system of internal controls, which ensures that its assets are protected from loss and unauthorized use as well as business affairs are carried out in accordance with established procedures. These systems of internal controls also ensure that transactions are carried out based on authority and are recorded and reported in line with generally accepted accounting principles. The Company also has a system of regular internal audit carried out by competent professionals retained by the Company. The internal audit programme is approved by the Audit Committee, and findings of the internal auditor are placed before the Audit Committee and the Board at regular interval. The internal control system is adequate keeping in view size and nature of the Company’s business.


Standalone financial performance of the Company with respect to operational performance for the financial year ended on March 31, 2021 is as under:

Parameter 2020-21 (Rs.in crores) 2019-20 (Rs.in crores)

Growth (%)

Revenue from operations 1,891.99 1,640.74 15.31
Total income 2,003.88 1,690.09 18.57
EBIT 489.01 303.15 61.31
EBITDA 556.36 368.24 51.09
PBT before exceptional item 593.81 349.56 69.87
Total Comprehensive Income 434.59 263.08 65.19

Revenue growth continues to be driven by chronic therapies. This has enabled the domestic business to outperform the industry while the international business continues to penetrate deeper within existing markets.

Improvement in EBITDA was based on a favourable product-mix, operating leverage at higher scale, subdued operating expenditure due to COVID-19, benefits from cost excellence initiatives and an advantageous exchange rate in first half of the year.

Consolidated financial performance of the Group for the financial year ended on March 31, 2021 is as under:

Parameter 2020-21 (Rs.in crores) 2019-20 (Rs.in crores)

Growth (%)

Revenue from operations 2,042.52 1,774.73 15.09
Total income 2,154.90 1,825.40 18.05
EBIT 489.01 303.15 61.31
EBITDA 560.41 377.57 48.43
PBT before exceptional item 596.88 358.89 66.31
Total Comprehensive Income 448.86 257.42 74.37


There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on March 2021, permanent employees’ strength and temporary employees’ strength was 4,122 and 486 respectively.


The key financial ratio for 2020-21 and changes therein as compared to the immediately preceding financial year along with detailed explanation in cases where the change is 25% or more is as under:

a) Debtors Turnover Ratio: Net Credit Sales/Average Account Receivable

This ratio for the year was 5.15 (times) as against 4.99 (times) in the previous year.

b) Inventory Turnover Ratio: Cost of Goods Sold/Average Inventory

This ratio for the year was 2.45 (times) as against 2.59 (times) in the previous year.

c) Interest Coverage Ratio: EBITDA/Interest Payment

This ratio for the year was 77.36 (times) as against 125.46 (times) in the previous year. The Company has very healthy interest coverage ratio in absolute terms. However, the coverage at the end of financial year decreased by 38.34% on account of other interest payment of Rs.492.51 which may not reoccur. d) Current Ratio: Current Assets/Current Liabilities

This ratio for the year was 4.73 (times) as against 3.43 (times) in the previous year. This ratio improved by 38.10% due to higher sales and higher profit during the year.

e) Debt-Equity Ratio: Total Liabilities/Shareholders’ Equity

This ratio for the year was 0.22:1 (times) as against 0.25:1 (times) in the previous year.

f) Operating Profit Margin: EBIT/Sales

Operating profit margin for the year was 26.45% as against 18.87% in the previous year. This ratio improved by 40.12% on account of higher profit that Company realised due to higher sales of chronic products, acquisition of pharmaceutical business of Lekar Pharma Limited, price increase in certain products and favourable exchange rate in first half of the year.

g) Net Profit/Sales Margin:Net

Net profit margin is calculated on Total Comprehensive Income (excluding other income) for the year was 17.45% as against 13.31% in the previous year. This ratio improved by 31.15% for the reasons stated above for improvement in operating profit margin.

The ratio for the previous year has been re-stated wherever necessary to make it comparable to current year calculation.


This financial performance is calculated by dividing Total Comprehensive Income (as reduced by other income) by shareholders’ equity. Return on Net worth or Return on Equity during the year was 17.45% as against 13.31% in the previous year. This ratio improved by 48.84% due to higher net profit during the year the reasons whereof are stated above for improvement in operating profit margin.

For and on behalf of the Board of Directors

Ranjit Shahani


Place: Mumbai

Date: June 14, 2021