1.Economyand Industry Outlook
Economic Review:
As the global healthcare system re-equilibrates post- pandemic, the
pharmaceutical industry has resumed pre-COVID-19 levels of investment and other aspect.
Process and technology innovations that were accelerated by extreme circumstances during
the pandemic are being integrated across the global pipeline and implemented as
operational and organizational changes that are enabling ongoing productivity gains. As
per the AQVIA report, the global medicine market is expected to grow at 3-6 % CAGR
(Compound Annual Growth Rate] through 2027,
achievingabout$1.8 trillion in total marketsize in 2027.
As technology and data advances take hold across the pharmaceutical
development pipeline, productivity is being impacted by a range of trade-off effects on
complexity, timing, and probability of success. Spending on Global medicine continues to
increase with driven by new medicines, expected to increase by $190 billion over the next
five years compared to $161 billion over the past few years. The largest driver of
medicine spending through the next five years is still expected to be global COVID-19
vaccinations, but leaving aside the pandemic, global spending on medicines continues to be
driven by innovation and offset by losses of exclusivity and the lower costs of generics
and biosimilars. Immunology, Anti-diabetics, Neurology, Cardiology, Respiratory & Pain
will be the top segments by value. Infectious diseases, including COVID-19 as well as
anti-bacterial, anti-viral, anti- fungal and anti-parasitic treatments, have included
novel treatments for HIV, Ebola, and more recently monkeypox and are 16% of NAS launches
over the last decade. Growing share of new launches in 2022-23 were excellent resulting to
increasingly availability of novelscience for patients.
With the emerging trend, the global injectable drugs market is expected
to grow at 5.7 % CAGR in a forecasted period of 2022 - 2030 with revenue of approx.
$ 937 billion. The rising preference for self- administration of drugs,
an increasing number of regulatory approvals and usability advantages are anticipatedto
fuel the growth.
Industry Overview
Over the last few decades, the Indian Pharmaceutical industry has
experienced rapid expansion. We can consider the time before 1970 as the first stage of
pharma industry. At that time, the Indian market was dominated by foreign companies.
Second stage covers 1970 to 1990 when several domestic companies began operations. 1990 to
2010 is the third stage, where liberalization led Indian components to launch operationsin
foreign countries.
The Indian pharmaceutical industry is one of the largest and most
important sectors within the countrys economy. It plays a vital role in providing
affordable healthcare solutions not only to the Indian population but also to the global
market. India is often referred to as the "Pharmacy of the World" due to its
large-scale production of high-quality, cost-effective and innovative generic medicines.
The discipline of precision medicine and genomic medicine has gained significant interest
from researchers and healthcare providers globally. The pharmaceutical landscape has
undergone a massive transformation with the emergence of new technologies, innovative,
cost-effective and more efficient manufacturing approaches. In addition, increasing
investment flow in this space has impacted the market growth positively.
Indias pharmaceutical sector forms a major component of the
countrys foreign trade, with attractive avenues and opportunities for investors.
India supplies affordable and low-cost generic drugs to millions of people across the
globe and operates a significant number of United States Food and Drug Administration
(USFDA) and World Health Organization (WHO) Good Manufacturing Practices (GMP)-compliant
plants. India has occupied a premier position among pharmaceutical manufacturing countries
of the world. The Economic Survey 2023 projects that Indias
domestic pharmaceutical market will reach $130 billion by 2030,
sustained by the countrys continued growth in the industry despite the COVID-19
pandemic. The Pharma sector currently contributes to around 2% of the countrys GDP.
The industry has seen significant amount of FDIs from last two years.
The investment interests have started to show good outcomes in overall business expansion
of the industry both in terms of offerings and geographical access. It is good sign
indicating prominent role India will play in the pharmaceutical supply to the world in
years to come. Best quality with reliability at best price as an advantage of low cost of
production and R & D boosts efficiency leadingto competitive exports.
Business overview
Kilitch Drugs (India) Limited (hereinafter referred to as
“the Company”) is one of the Indias fastest growing and
leading pharmaceutical manufacturing companies engaged in the business of development,
manufacture and marketing of broad range of pharmaceutical formulations. Over the past
many years since its incorporation, we now have large number of Pharmaceutical
Formulations in various dosage forms like Solid, Liquid and Parental marketed across the
Globe with an ultimate purpose of making the world a healthier place. The manufacturing
plant in Mumbai is equipped with a dedicated dry powder section, ophthalmic products as
well as the capacity to produce smallvolume liquid ampoulesand vials.
The company has an extensive presence in many countries in Asia,
Africa, CIS and Latin America with a broad product portfolio to suit the needs of each
country. Commitment and Consistency in fulfilling the needs and demands of clients and
customers is what helped the company earn the faith of the customers. The Company has been
carrying on and has acquired experience with regard to the manufacture and marketing of a
wide range of drugs and pharmaceutical products and is in possession of techniques,
formulae, recipes, processes, standards, specifications and know how relating to the
manufacture of such drugs and pharmaceutical products. Over three decades of
pharmaceutical solutions, the company has expanded its footprint and focused more to
enhance its operation across the globe. The Company has constantly has been working
towards improving quality systems, compliances to environment and safety while
simultaneously creating additional capacities with supporting infrastructure.
The Company has taken a step to set up a new green field pharmaceutical
products at Khopoli, Maharashtra, India for development and manufacturing of various
pharmaceutical products with an objective ensure the production of high-quality products,
establish a robust supply chain and reduce our dependence on outsourcing. This move will
enable us to make a greater impactin both the domestic and international markets.
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, interest rates, liquidity as
well as foreign exchange rates volatility, sudden changes in the regulations related to
trade by countries where the company does business. The company constantly reviews its
systems and processes and takes adequate measures to address these risks or meet its
obligations.
Revenue details:
Particular |
2022-23 |
2021 |
-22 |
Growth |
|
(rs. In Lakh) |
(Rs.In |
Lakh) |
(%] |
| 0sD |
2,080 |
|
1,600 |
30 |
| General |
|
|
|
|
| Ini |
>4,096.81 |
|
3,655 |
12.08 |
| njectable |
|
|
|
|
| Ophthalmic |
849.60 |
|
288 |
195 |
| Cephalosporin |
2,029.75 |
|
1,765 |
15 |
| Others |
2,722.19 |
|
3,208 |
-15.14 |
2. Financial Performance
In the financial year 2022-23, the Company achieved an income from
operations of Rs. 11,778.35 Lakh as compared to Rs. 10,515.98 Lakh in previous year. The
Companys total income stood Rs. 12,238.11 Lakh. Net Profit after tax for the year end 31%
March, 2023 from continuing operationswas Rs. 1571.73 Lakh.
In the financial year 2022-23, the Companys consolidated income from
operation was Rs. 13,959.90 Lakh as compared to Rs.11,423.42 Lakh. Total consolidated
income stood Rs.14,251.70 Lakh. Consolidated Net Profit after tax as on 31% March, 2023
was Rs. 828.27 Lakh.
Key Financial Ratio
| Particulars |
31.03.2023 |
31.03.2022 |
change % |
| Return on Net |
|
|
|
| Worth (%) |
8.07 |
5.91 |
35.70 |
| Debtor |
2 49 |
3.27 |
-23.71 |
| Turnover |
|
|
|
| Inventory |
12.82 |
15.48 |
-17.18 |
| Turnover |
|
|
|
| Interest |
|
|
|
| Coverage |
22.10 |
22.02 |
0.3 |
| Current |
203 |
1.81 |
12.39 |
| Ratio |
|
|
|
| Debt Equity |
0.11 |
0.11 |
- |
| Ratio |
|
|
|
| Operating Profit |
50.03 |
42.71 |
17.14 |
| Margin (%) |
|
|
|
| Net Profit |
12.84 |
9 40 |
33.75 |
| Margin (%) |
|
|
|
3.Riskand Concerns
The Company emphasis on risk management and has an enterprise - wide
approach to risk management which identify and manage key operational and strategic risks.
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, assessmentand 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 bythe Board.
The Company continues its initiatives aimed at assessment and avoidance
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 timetotimein the light of its
effectiveness.
Category of risks experienced and mitigated by the Company are related
to Global Market, Competition, Covid -19 Pandemic, Regulatory and Quality Compliance,
Intellectual Properties, Commercial and Financial Risk, Environment, Health and Safety,
Human Resource, Regulatoryand Sustainable Operations.
4. Internal Control Systems
The Company has in place adequate internal financial controls over
financial reporting. It has adopted necessary policies and procedures for ensuring the
orderly and efficient conduct of its business, including adherence to Companys policies
safeguarding of its assets, prevention and detection of frauds and errors, accuracy and
completeness of the accounting records and timely preparation of reliable financial
information.
The Company maintains a system of well established policies and
procedures for internal control of operations and activities and these are continually
reviewed for effectiveness. 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
managementand to suggestimprovements.
Kilitchs overall system of internal control is adequate given the size
and natureof operations and has effective implementation of internal control self
assessment procedures to ensure compliance to policies, plans and statutory requirements.
The Audit Committee of the Company periodically review the functions of
Internal Audit. The Management of the Company assessed the effectiveness of the Companys
internal control over financial reporting. Based on its evaluation, the Audit Committee
has concluded that the internal financial controls of the Company are adequate and
operating effectively.
5.Human Resource
Kilitch and its subsidiaries are striving to build and maintain a
positive employee experience with high satisfaction and quality of life, so that employees
can contribute their best efforts to their work. We consider employees as an integral part
of our operations and we putin place appropriate compensation plans, feedback processes,
continuing training and upgradation of skills in their functional areas while maintaining
safe and healthy working environment to ensure all round contribution and participation in
the self growth as well as growth of the Company.
Our motive has been to create a committed work force through
people-enabling processes and knowledge sharing practices based upon our value system. The
key element of our Human Resource strategy is to provide a healthy working environment
that empowers people, encourages innovation, enhances work satisfaction and builds a merit
- driven organisation. As on 31st March, 2023, there were 153 employees of the Company.
6.Forward - Looking Statement
Certain statements made in the Management Discussion and Analysis
Report relating to the Companys objectives, projections, outlook, expectations,
estimates, and others may constitute forward-looking statements within the meaning of
applicable laws and regulations. Actual results may differ from such expectations, whether
expressed or implied. Several factors could make a significant differenceto our
operations. These include climatic and economic conditions affecting demand and supply,
government regulations and taxation, any epidemic or pandemic and natural calamities over
which we do not have any direct/indirect control. Readers are cautioned not to place undue
reliance on any forward - looking statements. The report should be read in conjunction
with the Companys financial statements included herein and the notes thereto.
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