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Onyx Biotec Ltd Management Discussions

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Mar 28, 2025|12:00:00 AM

Onyx Biotec Ltd Share Price Management Discussions

The following discussion is intended to convey management’s perspective on our financial condition and results of operations for the period ended May 31, 2024 and the financial years ended March 31, 2024, 2023 and 2022. One should read the following discussion and analysis of our financialcondition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled "Financial Statement" on page 175 of the Draft Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 26 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for furtherdetails regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 18 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Onyx Biotec Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Information for the period ended May 31, 2024 and the financial years ended March 31, 2024, 2023 and 2022 included in this Draft Red Herring Prospectus beginningon page 175 of this Draft Red Herring Prospectus

BUSINESS OVERVIEW

Onyx started its operation in pharmaceutical industry with sterile water for injections in the year 2010. Since then, Onyx has been associated with the healthcare segment and offering Sterile Pharmaceutical products and has become a prominent supplier of sterile products to major corporations, which includes the top pharma companies at pan India level. Onyx is committed to provide high-quality products at affordable price. Presently, our Company manufactures Sterile Water for Injections, and acts as a pharmaceutical contract manufacturer offering a comprehensive range of Dry Powder Injections and Dry Syrup for India and overseas. Our products are being processed and manufactured in accordance with best FDA practices available globally. Our system and product is tested constantly at each level to ensure international standards of quality in-house and FDA Certified Laboratories. Our core business is focused on providing end-to-end product development and manufacturing solutions to our clients. Our service also include preparation and filing of regulatory dossiers in the Indian and global markets.

Our Company has two state-of-the-art manufacturing facilities in the state of Himachal Pradesh. The manufacturing units are situated at:

Unit I - Bir Plassi Near Sainimajraropar, Ropar, Nalagarh Road, District Solan 174101, Himachal Pradesh, India. Unit II - Village Teliwala. P.O Manjholi, Tehsil: Nalagarh, Distt: Solan 174101, Himachal Pradesh, India.

Our manufacturing facility Unit I is having production capacity of 7,00,000 units of Sterile Water for Injections per day and Unit II is having a capacity of 1,92,000 units of dry powder injection per day and 80,000 units of dry syrup per day. Our manufacturing units are equipped with Modern Equipment, ensures Quality Control and follows Sustainable Practices. Our manufacturing units have been accredited by global regulatory agency i.e. World Health Organization Good Manufacturing Practice ("WHO-GMP"). During the Financial Years 2024, 2023 and 2022, our manufacturing units were subject to 8 (eight) audits in Unit I and 7 (seven) audits in Unit II by our clients and 3 (three) inspections by our regulators.

We intend to utilise a 607.70 Lakhs of the Net Proceeds towards upgradation of our existing manufacturing Unit I, to manufacture large volume parentals for intravenous use, which will be sold under Onyx brand name to pharma companies, distributors, stockist and hospitals. This will enable our Company to cater the entities which are operating in critical care space of healthcare industry. This will also enable us to offer all three categories of sterile products to our customers. We also intend to utilise a 124.05 Lakhs of the Net Proceeds to setup a high-speed cartooning packaging line at existing manufacturing Unit II for Dry Powder Injections. We believe that setting up a high-speed cartooning packaging line which will enable us to (i) complete packaging at a considerably quicker rate; (ii) Cost efficiency by reducing manpower cost; and (ii) Ensure product safety and error free output. These will contribute immensely towards our business operations and market position.

For detailed information on the business of our Company please refer to "Our Business" beginning on page numbers 115 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED FINANCIALS

After the date of last Audited Accounts i.e. for the period ended May 31, 2024, the Directors of our Company confirm that, there have not been any significant material developments.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 26 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected bynumerous factors including the following:

Our manufacturing units are concentrated in Solan, Himachal Pradesh, and we are exposed to risks originating from economic, regulatory, political and other changes in this region, including natural disasters, which could adversely affect our business, results of operations and financial condition.

Any slowdown or shutdown in our manufacturing operations could have an adverse effect on our business, results of operations, financial condition and cash flows.

Any manufacturing or quality control concerns or our inability to deliver products on a timely basis, or at all, could result in the cancellation of purchase orders, breaches of relevant agreements, and termination of agreements by our clients and distributors, which could have an adverse effect on our business, results of operations, financial condition and cash flows.

Our manufacturing units are subject to periodic inspections and audits by regulatory authorities and clients. We may be subject to regulatory action which may damage our reputation leading to an adverse effect on our business, results of operations, financial condition and cash flows.

We rely on domestic and international third-party suppliers for the supply of raw materials and any delay, interruption or reduction in such supply could adversely affect our business, results of operations, financial condition and cash flows.

DISCUSSION ON RESULT OF OPERATION

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled "Restated Financial Information"beginning on page 175 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

Our revenue and expenses are reported in the following manner:

Revenues

Revenue of operations

Our Company’s revenue is primarily generated from the sale of Sterile Water for Injections, Dry Powder Injections and Dry Syrup.

Other Income

Our other income mainly consists of interest income, rent and other income.

The below table show our revenue for the period ended May 31, 2024 and fiscal 2024, 2023 and 2022:

( In Lakhs)

Period ended

For the period ended

Particulars

May 31, 2024 March 31, 2024 March 31, 2023 March 31, 2022

Income

Revenue from Operations 1,052.81 5,374.88 3,948.19 4,486.14
% of total revenue 99.88% 99.77% 99.69% 99.73%
Other income 1.30 12.55 12.46 11.95
% of total revenue 0.12% 0.23% 0.31% 0.27%

Total Revenue

1,054.11 5,387.43 3,960.65 4,498.09

Expenditure

Our total expenditure primarily consists of cost of purchases of materials consumed, changes in inventories of finished goods, work-in-progress and stock-in-trade, employee Benefit expenses, finance cost, Depreciation, amortization & impairment expense and other expenses.

Cost of materials consumed

This represents cost of materials consumed comprises of Active pharmaceutical ingredient (API), LDPE Granules, Primary and Secondary Packing Material and Tertiary Packing Materials.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

This relates to the changes in inventories of finished goods, work-in-progress and stock-in-trade.

Employment Benefit Expenses

It includes salaries, wages, bonus and allowances, directors’ remuneration, contributions to welfare funds, provision for gratuity and other expenses.

Other Expenses

It includes Freight outward, Repairs and maintenance - Machinery, Repairs and maintenance - Others, Rates fee and taxes, Donation, Travelling, Vehicle running expenses, Plant Cleaning & Sanatization Expenses, Legal and professional (Refer note 27), Business promotion , Office expenses, Insurance expenses, Interest and Penalty for delay in payment, Rent of Machinery, Printing & Stationery, Postage and Courier Charges, Telephone expenses, Exchange rate fluctuations, Bank charges, Security contract charges, Software expenses, Loss on sale of Fixed assets, Validation Testing & Calibration charges and Miscellaneous expense.

Finance Costs

Our finance costs mainly include processing charges and interest.

Depreciation

Depreciation includes depreciation, amortization& impairment.

RESULTS OF OUR OPERATION

( In Lakhs)

Particulars

May 31, 2024 31st March, 2024 31st March, 2023 31st March, 2022

Incomes:

Revenue from Operations 1,052.81 5,374.88 3,948.19 4,486.14
% of total revenue 99.88% 99.77% 99.69% 99.73%
% Increase/(Decrease) - 36.10% (11.99%) -
Other income 1.30 12.55 12.46 11.95
% of total revenue 0.12% 0.23% 0.31% 0.27%
% Increase/(Decrease) - 0.69% 4.31% -

Total Revenue

1,054.11 5,387.43 3,960.65 4,498.09
% Increase/(Decrease) -80.43% 35.99% (11.95%) -

Expenses:

Cost of material consumed 613.09 3,616.87 2,129.69 2,647.16

 

Particulars

May 31, 2024 31st March, 2024 31st March, 2023 31st March, 2022
% of total revenue 58.16% 67.14% 53.77% 58.85%
% Increase/(Decrease) - 69.83% (19.55%) -
(Increase)/decrease in stock-in-trade 2.95 (42.73) (27.58) 5.15
% of total revenue 0.28% (0.79%) (0.70%) 0.11%
% Increase/(Decrease) - 54.93% (635.35%) -
Employee Benefit expenses 113.15 599.91 1,048.48 862.02
% of total revenue 10.73% 11.14% 26.47% 19.16%
% Increase/(Decrease) - (42.78%) 21.63% -
Other Expenses 49.81 372.61 351.80 407.96
% of total revenue 4.73% 6.92% 8.88% 9.07%
% Increase/(Decrease) - 5.91% (13.77%) -

Total Expense

779.01 4,546.66 3,502.40 3,922.30
% of total revenue 73.90% 84.39% 88.43% 87.20%
% Increase/(Decrease) - 29.82% (10.71%) -

Profit before Interest, Depreciation and Tax*

275.10 840.77 459.25 575.79
% of total revenue 26.10% 15.61% 11.59% 12.80%

Depreciation, amortization & impairment expense

51.06 224.93 149.13 144.77
% of total revenue 4.84% 4.18% 3.77% 3.22%
% Increase/(Decrease) - 50.83% 3.01% -

Profit before Interest and Tax

224.05 615.83 310.12 431.02
% of total revenue 4.16% 11.43% 7.80% 9.58%
Financial Cost 49.08 210.66 55.46 51.48
% of total revenue 4.66% 3.91% 1.40% 1.14%
% Increase/(Decrease) - 279.83% 7.73% -

Profit before Tax and

174.96 405.17 254.66 379.54

Extraordinary Expenses

% of total revenue 16.60% 7.52% 6.40% 8.44%
Extraordinary Expenses - - - -
% of total revenue - - - -
% Increase/(Decrease) - - - -

Restated Profit/(Loss) before tax

174.96 405.17 254.66 379.54
% of total revenue 16.60% 7.52% 6.43% 8.44%
% Increase/(Decrease) - 59.10% (33.17%) -

Tax expenses/(income)

Current and earlier years Tax 38.63 30.97 25.85 65.20
Deferred Tax 5.57 71.04 44.35 (20.96)

Total tax expenses

44.20 102.01 70.21 44.24
% of total revenue 4.19% 1.89% 1.77% 0.98%

Restated profit/(loss) after Tax

130.77 303.16 183.46 335.29
% of total revenue 12.41% 5.63% 4.63% 7.45%
% Increase/(Decrease) - 64.36% (45.28%) -

* includes other income

Our income is dependent upon few major intermediaries, details of the same is as following:

( in lacs)

Particulars

May 31, 2024

Fiscal 2024

Fiscal 2023

Fiscal 2022

Amount Percentage Amount Percentage Amount Percentage Amount Percentage
(%) (%) (%) (%)

Top 5 customers

661.71 62.85% 2,752.77 51.22% 3,141.05 79.54% 3,591.09 80.05%

Top 10 customers

864.69 82.13% 3,824.93 71.16% 3,731.12 94.48% 4,216.10 93.98%

Capacity utilised

Unit I Unit II

Financial Year

Installed Capacity (in Units in lakhs Utilized Capacity (in Units in lakhs Percentage of utilization Installed Capacity (in Units in lakhs Utilized Capacity (in Units in lakhs Percentage of utilization
PA) PA) (%) PA) PA) (%)
2021-22 2,300.00 1,591.57 69.20% - - -
2022-23 2,300.00 1,447.73 62.94% 20.28 6.39 31.52%
2023-24 2,300.00 1,376.90 59.87% 243.33 99.51 40.90%
May 31, 2024 383.33 171.03 62.94% 40.56 21.13 52.10%

A break up of the product wise revenue earned during the preceding three years and the for the period ended May 31, 2024 has been provided below:

Segments

May 31, 2024

March 31, 2024

March 31, 2023

March 31, 2022

As a % As a % As a % As a %
( in lakhs) of total Revenue ( in lakhs) of total Revenue ( in lakhs) of total Revenu e ( in lakhs) of total Revenu e

Sterile Water for Injections

499.04 47.40% 3,200.49 59.55% 3,918.91 99.26% 4,486.14 100.00%
Dry Powder Injections* 548.53 52.10% 2,053.51 38.21% 26.34 0.67% - 0.00%
Dry Powder Syrup* 5.24 0.50% 120.88 2.25% 2.94 0.07% - 0.00%

Total

1,052.81 100.00% 5,374.88 100.00% 3,948.19 100.00% 4,486.14 100.00%

* Manufacturing started from March 2023

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MAY 31, 2024

Income from Operations

Our revenue from operations for the period ended May 31, 2024 was 1,052.81 Lakhs which was about 99.88% of the total revenue and which comprises of revenue from sale of Sterile Water for Injections, Dry Powder Injections and Dry Syrup. Our Company expects a growth of around 12% plus in turnover based present operational performance, orders in hand and past performance of the Company.

Other Income

Our other income for the period ended May 31, 2024 was 1.30 Lakhs which was about 0.12% of the total revenue and which includes interest and rental income.

Expenditure

Cost of materials consumed

The Cost of materials consumed for the period ended May 31, 2024 were 613.09 Lakhs which was about 58.16% of the total revenue. The materials consumed comprises of Active pharmaceutical ingredient (API), LDPE Granules, Primary and Secondary Packing Material and Tertiary Packing Materials.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

The changes in inventories of finish goods & work-in-progress for the period ended May 31, 2024 were 2.95 Lakhs.

Employee Benefit expenses

The employee Benefit expenses for the period ended May 31, 2024 were 113.15 Lakhs which was about 10.73% of the total revenue and which includes salaries, wages, bonus and allowances, contributions to welfare funds, provision for gratuity and other expenses.

Other Expenses

Other Expenses for the period ended May 31, 2024 were 49.81 Lakhs which was about 4.73% of the total revenue and which includes Freight outward, Repairs and maintenance - Machinery, Repairs and maintenance - Others, Rates fee and taxes, Donation, Travelling, Vehicle running expenses, Plant Cleaning & Sanatization Expenses, Legal and professional, Office expenses, Insurance expenses, Interest and Penalty for delay in payment, Rent of Machinery, Printing & Stationery, Postage and Courier Charges, Telephone expenses, Bank charges, Security contract charges, Software expenses, Validation Testing & Calibration charges and Miscellaneous expense.

EBIDTA

Our EBITDA for the period ended May 31, 2024 were 275.10 Lakhs. The growth in EBIDTA is the result of better capacity utilization, reduction in the price of raw materials and reduction in fixed cost during the period ended May 31, 2024.

Financial Costs

Financial costs for the period ended May 31, 2024 were 49.08 Lakhs which was about 4.66% of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the period ended May 31, 2024 were 51.06 Lakhs which was about 4.84% of the total revenue and which consists of Depreciation, amortization & impairment expense.

Profit /(Loss) after Tax

PAT for the fiscal year ended May 31, 2024 was 130.77 Lakhs which is about 12.41% of the revenue. The growth in PAT is the result of better capacity utilization, reduction in the price of raw materials and reduction in fixed cost during the period ended May 31, 2024.

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2024

Income from Operations

Our revenue from operations for the fiscal year ended March 31, 2024 was 5,374.88 Lakhs which was about 99.77% of the total revenue and comprises of revenue from sale of Sterile Water for Injections, Dry Powder Injections and Dry Syrup. Our manufacturing Unit II commenced operation in the month of March 2023 and started production of Dry Powder Injections and Dry Syrup. Thus, in FY2024, both the manufacturing units I and II were operational and we have revenue from sale of all the three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. However, in FY2023, our revenue comprises of revenue from sale of Sterile Water for Injections upto February 2023, and only in March 2023, post commencement of Unit II, we have recoded revenue from all three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. The growth in the turnover in FY2024 is the result of expansion of capacity and commencement of operation at Unit II of the Company which was only for a month in FY2023.

Other Income

Our other income for the fiscal year ended March 31, 2024 was 12.55 Lakhs which was about 0.23% of the total revenue and which includes interest and rental income.

Expenditure

Cost of materials consumed

The Cost of materials consumed for the period ended March 31, 2024 were 3,616.87 Lakhs which was about 67.14% of the total revenue. Our manufacturing Unit II commenced operation in the month of March 2023 and started production of Dry Powder Injections and Dry Syrup. Thus, in FY2024, both the manufacturing units I and II were operational and we have produced all the three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. However, in FY2023, we have produced only Sterile Water for Injections upto February 2023, and only in March 2023, post commencement of Unit II, we have produced all three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. Thus, the cost of raw material consumed in higher in FY2024 on account of consumption of raw materials for manufacturing of Dry Powder Injections and Dry Syrup with commencement of operation at Unit II of the Company which was only for a month (i.e. March 2023) in FY2023.

Further, price of the raw materials consumed, mainly comprised of Active pharmaceutical ingredient (API), has gone down in FY2024 as compared to FY2023. Thus, even with the increase in production, the cost of material consumed was not gone up in the same proportion.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

The changes in inventories of finish goods & work-in-progress for the period ended March 31, 2024 were (42.73) Lakhs.

Employee Benefit expenses

The employee Benefit expenses for the fiscal year ended March 31, 2024 were 599.91 Lakhs which was about 11.14% of the total revenue and which includes salaries, wages, bonus and allowances, contributions to welfare funds, provision for gratuity and other expenses. The directors of the Company have not drawn any remuneration during FY2024.

Other Expenses

Other Expenses for the fiscal year ended March 31, 2024 were 372.61 Lakhs which was about 6.92% of the total revenue and which includes Freight outward, Repairs and maintenance - Machinery, Repairs and maintenance - Others, Rates fee and taxes, Donation, Travelling, Vehicle running expenses, Plant Cleaning & Sanatization Expenses, Legal and professional, Business promotion , Office expenses, Insurance expenses, Interest and Penalty for delay in payment, Rent of Machinery, Printing & Stationery, Postage and Courier Charges, Telephone expenses, Bank charges, Security contract charges, Software expenses, Validation Testing & Calibration charges and Miscellaneous expense.

EBIDTA

Our EBITDA for the fiscal year ended March 31, 2024 were 840.77 Lakhs.

Financial Costs

Financial costs for the period ended March 31, 2024 were 210.66 Lakhs which was about 3.91% of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the fiscal year ended March 31, 2024 were 224.93 Lakhs which was about 4.18% of the total revenue and which consists of Depreciation, amortization & impairment expense.

Profit /(Loss) after Tax

PAT for the fiscal year ended March 31, 2024 was 303.16 Lakhs which is about 5.63% of the total revenue.

FISCAL YEAR ENDED MARCH 31, 2024 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023

Income

Total revenue has increased by 1,426.69 Lakhs and 36.10%, from 3,948.19 Lakhs in the fiscal year ended March 31, 2023 to 5,374.88 Lakhs in the fiscal year ended March 31, 2024. Our total revenue comprises of revenue from sale of Sterile Water for Injections, Dry Powder Injections and Dry Syrup. The increase in revenue was on account of increase in production and sale of finish product with the commencement of Unit II. Our manufacturing Unit II commenced operation in the month of March 2023 and started production of Dry Powder Injections and Dry Syrup. Thus, in FY2024, both the manufacturing units I and II were operational and we have revenue from sale of all the three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. However, in FY2023, our revenue comprises of revenue from sale of Sterile Water for Injections upto February 2023, and only in March 2023, post commencement of Unit II, we have recoded revenue from all three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. The growth in the turnover in FY2024 as compared to FY2023 is the result of higher sale with expansion of capacity and commencement of operation at Unit II of the Company which was only for a month in FY2023.

Expenditure

Total Expenditure increased by 1,275.27 Lakhs and 34.40%, from 3,706.99 Lakhs in the fiscal year ended March 31, 2023 to 4,982.26 Lakhs in the fiscal year ended March 31, 2024. Overall expenditure was increased mainly due to increase in sale volume and higher production with commencement of manufacturing at Unit II.

Cost of materials consumed

Cost of materials consumed increased by 1,487.18 Lakhs and 69.83%, from 2,129.69 Lakhs in the fiscal year ended March 31, 2023 to 3,616.87 Lakhs in the fiscal year ended March 31, 2024. Cost of materials consumed is increased on account of higher production with commencement of manufacturing at Unit II and better capacity utilisation.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade was (42.73) Lakhs in the fiscal year ended March 31, 2024 as against (27.58) Lakhs the fiscal year ended March 31, 2023. The decrease in changes in Inventories of finish goods, work-in-progress and finish goods was because of higher sale of finished product and lower inventory level.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage decreased by 448.58 Lakhs and 42.78% from 1,048.48 Lakhs in the fiscal year ended March 31, 2023 to 599.91 Lakhs in the fiscal year ended March 31, 2024. The employee cost was reduced because the directors have not drawn any remuneration during the FY2024.

Other Expenses

Other Expenses in terms of value and percentage increased by 20.81 Lakhs and 5.91% from 351.80 Lakhs in the fiscal year ended March 31, 2023 to 372.61 Lakhs in the fiscal year ended March 31, 2024. The increase was mainly on account of cost of Vehicle running expenses, Security contract charges, Software expenses, Insurance expenses, Legal and professional with the commencement of unit II.

EBIDTA

Profit before Interest, Depreciation and Tax has increased by 382.52 Lakhs and 83.07% from 458.25 Lakhs in the fiscal year ended March 31, 2023 to 840.77 Lakhs in the fiscal year ended March 31, 2024. Profit before Interest, Depreciation and Tax was increased due to increase in production and sale of finish product with the commencement of Unit II. Our manufacturing Unit II commenced operation in the month of March 2023 and started production of Dry Powder Injections and Dry Syrup. Thus, in FY2024, both the manufacturing units I and II were operational and we have revenue from sale of all the three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. However, in FY2023, our revenue comprises of revenue from sale of Sterile Water for Injections upto February 2023, and only in March 2023, post commencement of Unit II, we have recoded revenue from all three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. The growth in the turnover in FY2024 as compared to FY2023 with expansion of capacity and commencement of operation at Unit II of the Company and better capacity utilization has resulted in higher EBIDTA margin as compared to FY2023.

Further, price of the raw materials consumed, mainly Active pharmaceutical ingredient (API), has gone down in FY2024 as compared to FY2023. Thus, even with the increase in production, the cost of material consumed was not gone up in the same proportion. This has also contributed in the growth of EBIDTA margins in FY2024.

Finance Costs

Finance Costs in terms of value and percentage increased by 155.20 Lakhs and 279.83% from 55.46 Lakhs in the fiscal year ended March 31, 2023 to 210.66 Lakhs in the fiscal year ended March 31, 2024. Finance Costs was increased mainly due to higher interest outgo on increased borrowings to set up Unit II.

Depreciation & Amortization Expenses

Depreciation in terms of value increased by 75.81 Lakhs and 50.83% from 149.13 Lakhs in the fiscal year ended March

31, 2023 to 224.93 Lakhs in the fiscal year ended March 31, 2024. Increase in depreciation is due to additional depreciation on assets of Unit II and is general in nature.

Net Profit after Tax

Net Profit has increased by 119.71 Lakhs and 65.25% from 183.46 Lakhs in the fiscal year ended March 31, 2023 to

303.16 Lakhs in the fiscal year ended March 31, 2024. Net Profit After Tax was increased due to increase in production and sale of finish product with the commencement of Unit II. Our manufacturing Unit II commenced operation in the month of March 2023 and started production of Dry Powder Injections and Dry Syrup. Thus, in FY2024, both the manufacturing units I and II were operational and we have revenue from sale of all the three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. However, in FY2023, our revenue comprises of revenue from sale of Sterile Water for Injections upto February 2023, and only in March 2023, post commencement of Unit II, we have recoded revenue from all three products i.e. Sterile Water for Injections, Dry Powder Injections and Dry Syrup. The growth in the turnover in FY2024 as compared to FY2023, with expansion of capacity and commencement of operation at Unit II of the Company and better capacity utilization has resulted in higher PAT margin as compared to FY2023.

Further, price of the raw material consumed, mainly Active pharmaceutical ingredient (API), has gone down in FY2024 as compared to FY2023. Thus, even with the increase in production, the cost of material consumed was not gone up in the same proportion. This has also contributed in the growth of PAT margins in FY2024.

FISCAL YEAR ENDED MARCH 31, 2023 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022

Income

Total revenue was decreased by 537.44 Lakhs and 11.95%, from 4,486.14 Lakhs in the fiscal year ended March 31, 2022 to 3,948.19 Lakhs in the fiscal year ended March 31, 2023. We are pharma product manufacturing company and our growth is proportionally linked with the healthcare industry. With decrease in impact of Covid-19 in FY2023, the demand of our main product i.e. Sterile Water for Injections, were decreased. Our Sterile Water for Injections was used as dilutant with life saving dry powder Injections during Covid-19. This has resulted in decrease in demand and consequently reduction in revenue and capacity utilization as compared to FY2022.

Expenditure

Total Expenditure decreased by 411.56 Lakhs and 9.99%, from 4,118.55 Lakhs in the fiscal year ended March 31, 2022 to 3,706.99 Lakhs in the fiscal year ended March 31, 2023. The overall expenditure were gone down in FY2023 on account of lower production of products. With decrease in impact of Covid-19 in FY2023, the demand of our main product i.e. Sterile Water for Injections, were decreased. Our Sterile Water for Injections was used as dilutant with life saving dry powder Injections during Covid-19. This has resulted in decrease in demand and consequently reduction in production as compared to FY2022.

Cost of materials consumed

Cost of materials consumed decreased by 517.47 Lakhs, and 19.55% from 2,647.16 in the fiscal year ended March 31, 2022 to 2,129.69 Lakhs in the fiscal year ended March 31, 2023. Cost of materials consumed decreased on account of decreased in consumption of raw materials with lower production of finish goods. With decrease in impact of Covid-19 in FY2023, the demand of our main product i.e. Sterile Water for Injections, were decreased. This has resulted in decrease in demand and consequently reduction in production as compared to FY2022.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade was (27.58) Lakhs in the fiscal year ended March 31, 2023 as against 5.15 Lakhs the fiscal year ended March 31, 2023.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by 186.46 Lakhs and 21.63% from 862.02 in the fiscal year ended March 31, 2022 to 1,048.48 Lakhs in the fiscal year ended March 31, 2023. Overall employee cost was mainly due increase in staff strength and general increment in salary and incentives to employees and salary to directors,.

Other Expenses

Other Expenses in terms of value and percentage decreased by 56.16 Lakhs and 13.77% from 407.96 Lakhs in the fiscal year ended March 31, 2022 to 351.80 Lakhs in the fiscal year ended March 31, 2023. The decrease was on account of lower production.

EBIDTA

Profit before Interest, Depreciation and Tax has decreased by 117.54 Lakhs and 20.41% from 575.79 Lakhs in the fiscal year ended March 31, 2022 to 458.25 Lakhs in the fiscal year ended March 31, 2023. Profit before Interest, Depreciation and Tax was decreased due decrease in demand of our main product i.e. Sterile Water for Injections, post Covid-19. This has resulted in decrease in demand and consequently reduction in EBIDTA and capacity utilization as compared to FY2022.

Finance Costs

Finance Costs in terms of value and percentage increased by 3.98 Lakhs and 7.73% from 51.48 Lakhs in the fiscal year ended March 31, 2022 to 55.46 Lakhs in the fiscal year ended March 31, 2023. Finance Costs was increased mainly due to higher interest outgo on increased borrowings for setting up of new Unit II.

Depreciation & Amortization Expenses

Depreciation in terms of value and percentage increased by 4.35 Lakhs and 3.01% from 144.77 Lakhs in the fiscal year ended March 31, 2022 to 149.13 Lakhs in the fiscal year ended March 31, 2023. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit was decreased by 151.84 Lakhs and 45.28% from 335.29 Lakhs in the fiscal year ended March 31, 2022 to

183.46 Lakhs in the fiscal year ended March 31, 2023. The Net Profit was decreased due to decrease in demand of our main product i.e. Sterile Water for Injections, post Covid-19. This has resulted in decrease in demand of our product, consequently degrowth in revenue and capacity utilization as compared to FY2022 resulting in reduction in PAT margin.

Cash Flows

(Amount in lacs)

For the Period ended

For the year ended March 31,

Particulars

May 31, 2024 2024 2023 2022
Net Cash from Operating Activities (119.41) 151.62 623.60 48.55
Net Cash from Investing Activities 3.89 (314.79) (2,267.19) (577.59)
Net Cash used in Financing Activities 29.02 309.11 1,642.97 519.78

Cash Flows from Operating Activities

Net cash from operating activities for period ended May 31, 2024 was at (119.41) lacs as compared to the EBIDTA at

275.10 lacs Net cash from operating activities for fiscal 2024 was at 151.62 lacs as compared to the EBIDTA at 840.77 lacs, while for fiscal 2023, net cash from operating activities was at 623.60 lacs as compared to the EBIDTA at

459.25 lacs. For fiscal 2022, the net cash from operating activities was 48.55 lacs compared to EBIDTA of 575.79 lacs.

Cash Flows from Investment Activities

Net cash from Investing activities for Period ended May 31, 2024 was at 3.89 lacs. Net cash from investing activities for the fiscal 2024 was (314.79) lacs. This negative cash outflow is attributed to increase in investment in plant and equipments. Net cash from investing activities was at (2,267.19) lacs and (577.59) lacs in the fiscal 2023 and 2022 attributed to increase in investment in setting up of Unit II for manufacturing of Dry Powder Injections and Dry Syrup.

Cash Flows from Financing Activities

Net cash from Financing activities for Period ended May 31, 2024 was at 29.02 lacs Net cash from financing activities for fiscal 2024 was at 309.11 lacs. The positive cash flow was on account of infusion of equity capital in the Company.

In fiscal 2023 and fiscal 2022, Net cash from financing activities was 1,642.97 lacs and 519.78 lacs on account of increased loans and borrowings for setting up of new Unit II.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

2. Significant economic changes that materially affected or are likely to affect income from continuing Operations

Other than as described in the Section titled "Financial Information" and chapter titled "Management’s Discussion and Analysis of Financial Conditions and Results of Operations", beginning on Page 175 and 219 respectively of this Draft Red Herring Prospectus, to our knowledge there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations

Other than as described in the chapter titled "Risk Factors" and "Management’s Discussion and Analysis of Financial Conditions and Result of Operations", beginning on Page 26 and 219 respectively of this Draft Red Herring Prospectus, best to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

4. Future relationship between Costs and Income

Other than as described in the chapter titled "Risk Factors" beginning on Page 26 of this Draft Red Herring Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. Competition Conditions

Our Industry is fragmented consisting of large established players and small niche players. We compete with organized as well as unorganized sector on the basis of availability of product, price and product range. Further, there are no entry barriers in this industry and any expansion in capacity of existing manufacturers would further intensify competition. Industry is very competitive and we expect competition to continue and likely to increase in the future.

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