INDUSTRY STRUCTURE AND DEVELOPMENTS
Your Company is a producer of pharmaceutical chemicals. The
intermediates produced are used in pharmaceutical and chemical industries. Your Company is
amongst the manufacturers who produce for local and international needs of the
pharmaceuticals and chemicals industry. The pharmaceutical and chemical industry is
growing at a rapid pace every year. This results into growth of the support or
intermediate industry like us.
OPPORTUNITIES AND THREATS
The company looks forward optimistically for all round growth in
turnover & profitability in the ensuing years. Your company has taken effective steps
to realize the dream performance in the years to come. The company intends to double its
turnover in a short period of time. The company has taken effective measures to improve
quality of products and its productivity to outwit competitor from domestic and
international market.
The company has registered good sales growth & earned reasonable
profit during the current financial year. The company has plans to widen the product range
by increasing the basket of products thereby enlarging the customer and sales base.
PRODUCT PERFORMANCE
The company has two plants producing varied items. The basic purpose of
producing in two different plants is to improve efficiency and manageability. Your Company
shall achieve sustainable growth in both plants by modernization and automation of
operations. According to your Directors, these plants facilitate better division of
labour, enable us to develop expertise in each plant and their respective items, and hence
improve productivity and profitability of the Company.
BUSINESS OUTLOOK
The year 2023 holds a positive outlook for Indias pharmaceutical
industry, with a deeper focus on quality manufacturing, affordability of drugs and
adoption of innovation and technology.
The Active Pharmaceutical Ingredients (API) Market size is expected to
grow from USD 204.08 billion in 2023 to USD 285.29 billion by 2028, at a CAGR of 6.93%
during the forecast period (2023-2028).
The active pharmaceutical ingredients (API) market has traditionally
been dominated by drugs, such as anti-infectives and diabetes, cardiovascular, analgesics,
and pain management drugs. However, as per the R&D trends, the demand is shifting
toward developing complex APIs used in novel formulations, targeting niche therapeutic
areas.
The major factors limiting the market growth include drug price control
policies across various countries, fierce competition among existing players, and
stringent regulatory policies.
Source:
https://www.mordorintelligence.com/industry-reports/global-active-pharmaceutical-ingredients-api-market
RISKS AND CONCERNS
Currency Risk:
Volatility in currency exchange movements results in transaction and
translation exposure. Our functional currency is the Indian Rupee. Appreciation of the
Rupee against any major currency could impact the reported revenue in Rupee terms, the
profitability and also result in collection losses.
Following a currency hedging policy that is aligned with market best
practices, to limit impact of exchange volatility on receivables and payables, forecasted
revenue and other current assets and liabilities. Hedging strategies are decided and
monitored by the Risk Management Committee of the Board convened on a regular basis.
Competition Risk:
We feel that the major business risks are the stiff competition due to
low priced products from countries like China and also from domestic manufacturers for
certain products. However the company is trying to expand its range of products to cater
to different segment of customers and market in order to absorb fall in sales and margins.
Credit Risk:
We have been able to reduce the irrecoverable amounts to a very
negligible level, notwithstanding the inevitability of having some debts which are not
recoverable. Due to strict monitoring and disciplined distribution channels, we do not
foresee any material risk on this count.
Dead Stocks/Slow moving items/Rejections Risk :
Sometimes the quality of finished product becomes bad or is rejected by
a customer. The Company has taken every step in the raw material procurement stage,
production stage, packing stage, testing stage and delivery stage to minimize the risk of
rejection. If due to some unforeseen reasons the goods are rejected or are not as per our
in-house standards, the company has made a system to reprocess all such failed material.
Minimum cost is incurred to make them into acceptable standards again. Further the
products that have irregular demand or are sold in lesser quantities round the year are
manufactured as per customers order only. Thus the company is successful in handling dead
stocks, slow moving items and rejections.
Fire, Theft & Explosion Risk:
The Company has been quite conscious of the inherent risk in our
business. A lot of measures to safeguard the fixed assets and stocks in the factory are
taken. The management has been regularly updating the risk profile and take necessary
corrective steps like educating workers, insisting workers to wear gum boots, gloves, eye
goggles, helmets etc., installing fire fighting equipments, putting sign boards, banning
smoking in the premises, keeping hazardous materials in a safe and protected place etc.
Apart from these measures, the company has also underwritten the various risks like fire,
theft & burglary, earthquake, floods, riots, public liability, sale/purchase in
transit etc. with ICICI Lombard General Insurance Co Limited
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has instituted adequate internal controls, managed by
professionals. The control mechanism duly supported by efficient integrated software
ensures a proper documentation, accounting, reporting and safeguarding of assets. The
Company has also well defined and established system of internal audit, which is
periodically reviewed by the audit committee and steps taken to strengthen the control
measures. The management and audit committee of the Board periodically reviews the
observations and findings of the statutory auditors and ensures adherence to the well laid
down policies, guidelines and procedures forming part of the internal control system.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
A satisfactory business performance with average volume growth in key
products and business units, combined with productivity improvement, cost management and
working capital management have contributed to the good operating results for the year.
Also sharp focus on cost and margins has resulted in enhanced operational efficiency.
Financial Performance Income Statement (f) in Crores
| Particulars |
31-03-2023 |
31-03-2022 |
31-03-2021 |
31-03-2020 |
31-03-2019 |
| Revenue |
310.65 |
221.81 |
179.02 |
137.45 |
111.14 |
| Other Income |
0.48 |
0.55 |
0.46 |
0.57 |
0.46 |
| Total Income |
311.12 |
222.36 |
179.48 |
138.02 |
111.60 |
| Expenditure |
(287.36) |
(198.17) |
(171.64) |
(131.81) |
(109.52) |
| Interest |
(1.23) |
(0.68) |
(1.28) |
(0.98) |
(1.06) |
| PBDT |
22.53 |
24.20 |
7.84 |
6.21 |
2.58 |
| Depreciation |
(0.00) |
(0.60) |
(0.49) |
(0.43) |
(0.42) |
| PBT |
22.53 |
23.60 |
7.34 |
5.79 |
2.16 |
| Tax |
(5.90) |
(6.42) |
(2.01) |
(1.55) |
(0.62) |
| Net Profit |
16.63 |
17.19 |
5.33 |
4.24 |
1.54 |
| Equity |
3.09 |
3.09 |
3.09 |
3.09 |
3.09 |
| EPS |
53.83 |
55.62 |
17.26 |
13.71 |
4.97 |
| CEPS |
55.90 |
57.54 |
18.85 |
15.09 |
6.32 |
| OPM % NPM % |
7.65
5.35 |
11.22
7.75 |
5.09
2.98 |
4.52
3.08 |
2.32
1.38 |
Key Financial Ratios
In accordance with SEBI (Listing Obligations and Disclosure
Requirements) (Amendment) Regulations, 2018 the Company is required to give details of
significant changes (change of 25% or more as compared to the immediately previous
financial year) in key sector-specific financial ratios.
The Company has identified the following ratios as key financial
ratios:
| Particulars |
31-03-2023 |
31-03-2022 |
| Debtors Turnover (Number of Days) |
6.55 |
5.79 |
| Inventory Turnover (Number of Days) |
12.37 |
15.95 |
| Current Ratio |
1.87 |
1.91 |
| Interest Coverage Ratio |
19.29 |
36.59 |
| Debt Equity Ratio |
0.30 |
0.16 |
| Operating Profit Margin (%) |
7.65 |
11.22 |
| Net Profit Margin (%) |
5.35 |
7.75 |
MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONTS
The industrial relations have been satisfactory in the Registered
Office Cum Factory and at the Corporate Office. Steps are also being taken to focus on
managerial and behavioural competence across the organization. Information Technology has
been a focused area for improving the operational efficiency and as a tool for
decision-making.
CAUTIONARY STATEMENT
Statement in the report of Management Discussion and Analysis
describing the Companys objectives, projections, estimates, expectations or predictions
may be "forward looking statements" within the meaning applicable securities
laws or regulations. These statements are based on certain assumptions and expectations
for future events. Actual results could differ materially from those of future events.
Actual results could differ materially from those expressed or implied. Important factors
that could make a difference to the Companys operations include economic conditions
affecting global and domestic demand supply, finished goods prices in the domestic and
overseas market in which the Company operates, raw materials cost and availability,
changes in Government regulations, tax regimes, economic developments within India and
other factors such as litigation and industrial relations. The Company assumes no
responsibility to publicly amend, modify or revise and forward looking statements, on the
basis of any subsequent development, information or events.
|
By order of the Board of
Directors |
|
For Samrat Pharmachem Limited |
|
Lalit Mehta |
| Mumbai |
Chairman & Managing
Director |
| May 30, 2023 |
DIN : 00216681 |
+91-9892691696
