Kopran Ltd Management Discussions.


Over the last few years, India has evolved as one of the worlds fastest-growing major economies. However, the COVID-19 outbreak in March 2020 dampened the pace to say the least. In order to prevent a large-scale spread, the Government declared a nationwide lockdown. A necessary move to curb the pandemics expanse, but these restrictions on logistics and non-essential business activities stimulated a financial disaster. In addition to logistical limitations, a setup of lesser demand and supply chain issues, resulted in a significant slowdown for the economy in the first half of FY 2020-21. However, as the nation began unlocking in May 2020, there were initial signs of recovery in the domestic markets. Moreover, a combination of improving high-frequency macro & micro-indicators coupled with healthy crop-cycles, well-performing monsoons, and rural demand helped in economic recovery. However, the second wave of the virus and its related lockdown has again caused disruptions in the economy and a temporary slowdown to the recovery.


India witnessed a strong rebound pattern in Q4. The fiscal stimulus packages issued by the Government, increased capital outlays, and favourable investment policies as part of the Union Budget 2021-22 supported this recovery. However, with the re-emergence of COVID-19 in March 2021, the expected real GDP growth of 10.5% in FY 2021-22 seems difficult. Courtesy the second wave, Indias real GDP growth in FY 2021-22 may finish lower than expected. However, experts believe India will rebound in FY 2022-23 with a projected 6.8% growth over FY 2021-22. Despite the recent disruptions, Indias economic activity has been gathering strength, with demand and supply sides staging an appreciable recovery, improved mobility, and optimism due to a sustained vaccination rollout programme, growth-enhancing proposals in the Union Budget, and reasonably favourable monetary conditions. However, Indias growth outlook could also depend on the trajectory of global economic recovery, in view of external trade linkages, hardening crude oil prices, and competition in the export market.


Indian Pharmaceutical Industry

The Indian pharma industry has achieved significant growth in both domestic and global markets during the past five decades. In 1969, Indian pharma contributed a meagre 5% in medical consumption. Impressive to note that the share of Made in India medicines in the Indian pharma market is now a robust 80%, as of 2020. More importantly, during the same period, the country has also established a leading position in the global generic pharmaceuticals landscape and is now known as the Pharmacy of the world. The pharma industry in India contributes to more than 20% by volume of the global generics market and 62% of the global demand for vaccines. Popularly called the archetype of affordable healthcare, the industry has significantly contributed towards improving public health outcome in India as well as worldwide.

Indian pharma manufacturers export nearly half of their pharma production, both in terms of volume and value, to the US, UK, South Africa, Russia, and other countries. However, there remains a significant opportunity largely untapped across Japan, China, Australia, ASEAN countries, Middle East region, Latin Americas, and other African countries. Indias pharma exports reached US$20.7 Billion in FY 2019-20 with year-on-year growth of 8.4%. This was largely driven by exports of generics drugs to over 200 countries (including both developed and developing markets). India is the source of 60,000 generic brands across 60 therapeutic categories. The country accounts for 40% of the generics demand in the US and ~25% of all medicines in the UK. India single-handedly meets 80% of the global demand for antiretroviral drugs needed by Acquired Immune Deficiency Syndrome (AIDS) patients, significantly contributing towards increasing accessibility of AIDS treatments.

COVID-19 has presented both, an opportunity and a challenge for India to emerge as the pharmacy of the world. During April- October 2020, Indias pharmaceutical exports, totalling USD 11.1 Billion, witnessed an impressive growth of 18%, as against $ 9.4 billion during the corresponding period a year ago. Furthermore, the Indian pharma export industry has grown in size, accounting for 7.3% of Indias total exports in April-October 2020, while the share was 5.1% in April-October 2019. As of today, pharmaceutical exports are Indias third largest exported commodity.

Active Pharmaceutical Ingredients (API) Industry

The Indian active pharmaceutical ingredients manufacturing segment can be divided into two sectors such as innovative or branded and generic or unbranded. The global generic drugs market was valued at around US $244.5 billion in 2017, growing at a CAGR of around eight per cent during 2010-2017. API is the largest segment of Indian Pharmaceutical Market. The major factors driving the synthetic chemical API market are patent expiration of synthetic drugs (small molecule drugs), increasing number of small molecules in clinical trials, and increasing outsourcing by the pharmaceutical companies.

India is slated to become the second largest global generic API merchant market by 2020, beating Italy with an eight percent market share. The Indian pharmaceutical industry which accounts for the second largest number of Abbreviated New Drug Applications (ANDAs), is the worlds leader in Drug Master Files (DMFs) applications with the US. With the rising cost of healthcare there is an increasing generics consumption over branded drugs, thus driving the growth of generic APIs market.

A good quality API facilitates the manufacturing of effective and safe essential drugs. The API growth is driven by:

- Rising prevalence of chronic and infectious diseases such as diabetes, cancer, arthritis, asthma chronic obstructive pulmonary disease (COPD) bone & joint infections, pneumonia etc.

- An increase in geriatric population

- An expedited pace of new drug-development using API

- Advancements leading to dynamic drug assembling

- Aggravated healthcare costs

The growing partnerships between Asian API manufacturers and global vendors, along with policy revamp in the region, preferring intellectual properties, will significantly encourage the API market growth in Asia. The captive API segment, is anticipated to grow at a significant rate in the coming years owing to the easy availability of raw materials and greater investments by major players to develop manufacturing facilities. Almost 66% of the markets growth will originate from Asia. Japan, China, and India are the key markets for active pharmaceutical ingredients in Asia. The increased healthcare expenditure by the urban population and rapid surge in the aged population are influencing the APIs market growth, which has led to an increase in the number of DMF filings for APIs.

Key Growth Drivers

• Increased growth in large under-penetrated markets such as Japan and China

• More affordability, owing to sustained growth in incomes and increase in insurance coverage

• Better access to medicines and healthcare facilities, helped by an increased investment in medical infrastructure, new business models for Tier-II towns and rural areas, launch of patented products, and greater government spending on healthcare

• Higher momentum of advancement, going beyond generics with an increased focus on biologics, new drug development, and next-generation innovative products

• Expertise in low-cost generic, patented drugs and a movement towards end-to-end manufacturing

• Strong growth in the US market by driving higher ANDA share in molecules going off-patent, and potential ease in price erosion

• Increased acceptability of modern medicine and newer therapies owing to aggressive market creation by players, an increased acceptance of biologics and preventive medicine, and a greater propensity to self-medicate


Government-sponsored health coverage programmes

The Ayushman Bharat Yojana (The Union Governments National Health Protection programmes) is estimated to benefit 10 Crores vulnerable families (~40% of Indias population). The scheme aims to bring more vulnerable and unprivileged households under the protection of health insurance, to facilitate better healthcare to them. A widespread access to healthcare facilities would help companies widen their footprint.

Growing focus on chronic diseases

Indias disease burden is slowly transitioning towards chronic diseases. Therefore, there is an increasing demand for specialised drugs needed for such diseases. These drugs are currently more expensive than acute drugs and provide opportune windows for the domestic pharma players that serve affordable yet high-quality specialty drugs.

Exploring the underpenetrated markets

With the Indian pharmaceutical industry aspiring to become the worlds largest exporter of medicine by volume, the next wave of growth could come from increasing exports to large and traditionally underpenetrated markets such as Japan, China, Africa, Indonesia, and Latin America. Government interventions and enhanced trade-relations support can help the Indian pharma companies gain easy market access to these areas.

Public health sector to offer meaningful opportunities

The public health segment comprises the government directly purchasing from pharmaceutical companies. Although the public health segment in India is still at a very nascent stage, we are hopeful that an increased government focus on the public healthcare sector and improved budgetary allocation will further the momentum. Therefore, it can provide an ocean of opportunity to Indian pharma companies.

China plus one strategy

The Covid-19-led pandemic caused a global supply chain disruption in pharmaceutical industry. Companies are undergoing change in procurement strategies and are recalibrating to move away from China or seek alternative sources for the same APIs. As a result, Indian API sector is witnessing benefits of better inventory management and thrust on supply chain continuity from global customers. This has also caused a significant reduction in price sensitivity among formulation companies. The Indian pharma industry is anticipated to remain a critical part of the global supply chain as it is among the countries with highest US FDA approvals.

Government initiatives

Production-Linked Incentive (PLI) scheme: Aiming for lesser dependency on imports, the Government included pharma among the 12 sectors under the PLI scheme. To promote domestic production of critical key drug intermediates and APIs, it cleared 19 applications with an investment of $628.84 Million under the scheme.


Despite the struggling economy, the pharmaceutical sector can very well hold on to its growth. An enhanced access to medicines in the domestic market, rising per capita healthcare spending, increasing penetration of health insurance, and a higher instance of chronic diseases is likely to drive growth for the Indian pharmaceutical industry in the years ahead. Further, impetus on the Indian pharmaceutical industry is likely to be provided by the Governments Ayushman Bharat Yojana, the worlds biggest health scheme, launched in 2018. Buoyed by these factors, the Indian pharmaceutical industry is expected to hold on to its projected growth trajectory.


Kopran Limited is an integrated global pharmaceutical company committed to manufacturing and supplying international quality formulations and Active Pharmaceutical Ingredients (APIs). The formulation vertical is operated through Kopran Limited, and the APIs vertical is operated under Kopran Research Laboratories Limited (KRLL), a wholly owned subsidiary of Kopran Limited.

Developments of the year

• Continuous measures taken towards process/technology and yield improvement for making products more competitive and profitable

• Undertook upgradation and expansion of 3 blocks at Mahad facility to cater to the increasing demand of existing products and manufacture new molecules that are being developed

• Developed APIs/formulations for regulated and non-regulated markets

• Filed DMFs/dossiers in regulated and non-regulated markets

• To increase geographical reach by entering into new markets Formulations

Kopran focuses on penetrating new markets and growing its presence in untapped countries in order to maintain a prominent position for its formulating business. The Company is keen on probing regulated markets and has been filing dossiers in nonregulated markets too, aiming to gain a significant market share.

The Company filed 211 dossiers in the course of the last year, and moving ahead, the focus will be on capacity automation and cost optimisation. When the Company enters into long-term tender business, it back-to-back secures supply agreements also to reduce the risk of price variations.


• To Automise of manufacturing and packing lines to increase output of finished products, efficiency across production chain and reduce variable and manpower cost

• To participate in tenders in various countries

• Develop new products and filed dossiers in regulated and non-regulated markets.

• To expand the geographical reach by entering into new markets Active Pharmaceutical Ingredients (API)

The Company emphasises on increasing its participation throughout the regulated market in the US, Europe, and China. It has filed 7 DMFs in the US, and plans on launching more DMF products there. In terms of product development, Kopran is developing a comprehensive range of blockbuster products under Carbapenem, Antithrombosis, and Anti-diabetic class, which will help it strengthen its position in the segment. The Company is increasing its capacity by upgrading and expanding its Mahad facility, completed in June 2021. The Company has undertaken steps to expand its non-sterile plants too, while also developing its Panoli site as an API/intermediate facility.


• Developing complete range of Carbapenams to solidify the Companys position in the segment

• Developing Anti-thrombosis and Anti-diabetic portfolio

• Plan to capture major share of the US Atenolol market in the next two years

• Plans to file DMFs for new products being developed in regulated and non-regulated markets

• To start Panoli facilities and increase capacity at Mahad location


Key Financial Ratios based on Consolidated Financial Statement

Key ratio FY 2020-21 FY 2019-20 variance (%) comments
Debtors Turnover Ratio 4.62 4.01 15.31 -
Inventory Turnover Ratio 3.20 2.57 24.58 -
Interest Coverage Ratio 14.36 4.24 239.00 Increase in profits and reduction in debts
Current Ratio 1.72 1.59 8.21 -
Debt Equity Ratio 0.26 0.41 36.59 Reduction in long term debts
Operating Profit Margin (%) 19.61 10.67 83.79 Better sales realisation and higher turnover
Net Profit Margin (%) 16.35 7.85 108.18 Higher operating margin and reduction in debts
Return on Net Worth 25.23 11.18 125.67 Due to increase in profits

Key Financial Highlights on the Consolidated Basis

(Rs in Lakhs)

Particulars FY 2020-21 FY 2019-20 increase/(Decrease) (%)
Income from Operations 49,181.35 35,949.94 36.80
EBITDA 9999.43 4,695.65 113
PBT 8,333.60 2,828.36 195
PAT 6,160.62 2,102.02 193.08
Material Cost 26,544.79 22,305.58 19
Employee Benefit Expenses 3,715.66 3,685.21 0.82
Other Expenses 7,108.44 6,527.49 8.90
Shareholders Fund 24,503.04 18,968.01 29.18
Non-Current Liabilities 3,366.81 4,171.43 (12.09)
Current Liabilities 16,068.43 14,005.34 14.73
Non-Current Assets 16,243.36 14,884.56 9.12
Current Assets 27,694.92 22,260.22 24.41

Key Financial Highlights on the Standalone Basis

(Rs in Lakhs)

Particulars FY 2020-21 FY 2019-20 increase/(Decrease) (%)
Income from Operations 22,283.31 17,929.09 24.28
EBITDA 4,080.22 2,517.81 62.05
PBT 3,270.52 1,573.26 107.88
PAT 2,347.23 1,121.98 109.20
Material Costs 10,516.20 10,896.12 (3.48)
Employee Benefit Expenses 1,833.87 2,002.16 (8.40)
Other Expenses 3,654.96 3,467.53 5.40
Shareholders Fund 24,684.98 22,967.31 4.47
Non-Current Liabilities 853.40 1,354.70 (37)
Current Liabilities 6,856.99 8,386.89 (18.24)
Non-Current Assets 21,283.80 21,285.56 (0.01)
Current Assets 11,111.57 11,423.34 (2.72)


Operational Risk: Any manufacturing or quality control problems may damage the Companys reputation, adversely affecting business, results of operations, and financial conditions. To mitigate this risk, Kopran reliably take approvals from leading global regulatory authorities and regularly inspect our production facilities with respect to quality as well as environmental compliance.

Research & Development Risk: The pharmaceutical industry is a technology and research-driven industry. The Companys management values data security, automation of operations, and technological advancement in the industry. The Company, therefore, continue to invest in state-of-the-art technologies, R&D workforce, and laboratory infrastructure to build its manufacturing and innovation capabilities. The Company also maintains close ties with leading global companies and organisations to remain updated on the changes taking place in the industry.

Suppliers Risk: Profitability and margins are directly impacted by the volatility in prices. In case of a significant change in the raw materials prices and operational cost among others, profitability, too, will shift. The Company is sourcing materials from different suppliers to reduce price risk. Kopran closely monitors price trends, and as a result, formulate a unique purchase policy for each product with each supplier, which too reduces its dependency on suppliers. To reduce the impact of price volatility, the Company does not enter into long-term fixed-price agreements with customers and sells based on material costs. Competition Risk: The pharmaceutical industry is intensely competitive and Koprans inability to compete effectively may adversely affect its business, results of operations, and financial conditions. To be among the best in the industry, the Company makes constant efforts towards enhancing its business capacities and capabilities in line with global standards. The in-house teams work towards the cost-improvement programmes, while exploring and tapping different geographies.


The Company has created a credible track record of excellence due to its determined efforts to sustain best-in-class facilities and quality standards. Kopran is continuously delivering at par with what is expected of the Company, and re-establishes well-defined validation steps to monitor its facilities and processes. The purpose is to make a customer-conducive model in compliance with the regulations and requirements posed. Across all its facilities, the Company has installed best-in-class quality systems that cover our business processes, from managing supply chain to product delivery.

The quality management systems are continuously monitored, evaluated, and upgraded to meet the latest industry regulations and best practices. The Company has strengthened its quality process with the implementation of digitisation. This helps maintain sync with the growing number of processes and R&D needed to manage compliance and risk efficiently.


The Company has adequate internal control systems commensurate with its size and nature of business. Kopran firmly believes that change is the only permanent thing, and in line with that spirit, the Company regularly updates its systems for incremental improvements. The Audit Committee of the Board periodically reviews these systems, which record transactions, assets, and report on developments timely. Internal audit is being carried out by an independent firm of Chartered Accountants on a quarterly basis. The Audit Committee also regularly reviews the periodic reports of the Internal Auditors. Issues raised by Internal Auditors and Statutory Auditors are discussed and addressed by the Audit Committee.


The statement, forming a part of this Report, may contain certain forward-looking remarks with the meaning of applicable Securities Law and Regulations. Many factors could cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in Government regulations, tax regime, and other statutes.