Sequent Scientific Ltd Management Discussions.

Management Discussion and Analysis

Macro-Economic Scenario

The world faced unprecedent challenges in the year gone by due to COVID-19 which resulted in implementation of never seen before lockdowns across the globe to slow down the spread tremendously impacting the economic progress of several countries.

The global economy went into recession in CY20 with a negative growth rate of 3.5%*. However, rapid pace of vaccinations in developed countries allowed the IMF to revise GDP forecast to a growth of 6%* in CY21 and 4.4%* in CY22 in case no new virus strains emerge. However challenges due to Covid still remain which led to reimposition of lockdowns in some of the countries. Global central banks played a major role in supporting the economies by means of easy monetary policies, and the same is expected to continue in CY21 to facilitate faster recovery amidst uncertainty. Also, the fiscal policies announced by authorities in advanced economies are expected to provide support to the global economy. We now have access to vaccines that are helpful in reducing the seriousness and incidence of infections. The economic recovery rate is expected to vary depending on an economys reliance on the front-line facing businesses like tourism, access to health care, and the effectiveness of government social and economic policy support.

The U.S. economy is expected to grow at 6.4% on the back of additional policy measures announced in 2020. Expansion of telehealth services in rural areas, a US$ 2 billion contract with pharmaceutical firms to supply 100 million doses of vaccines, and extension of unemployment insurance were among the steps taken by the U.S. government. In January 2021, the Government announced next round of measures which includes allocating US$ 284 billion to first-time borrowers in the low-income and underserved group in January 2021 and a further US$ 1,844 billion in March 2021 for families and businesses. A total of US$ 200 million was also set aside for the discovery of new virus variants*.

*Source: ;

The E.U. economic activity softened and is expected to remain below 2019 levels due to the re-emergence of new COVID-19 cases. ECB took several initiatives to mitigate the social and economic challenges arising out of this crisis. E.U. leaders set up a recovery fund of US$ 890 billion for grants to be given from 2021 to 2023. ECB took steps to provide stability in financial markets, along with reducing the borrowing rate and safeguarding credit supply.

China was the first country to roll out large-scale vaccine programs and is expected to cover 70% of its population by 2021 end. The government also made massive infrastructure investments, making it the only major country to record a positive GDP growth rate of 2.3% in 2020.

Animal Healthcare

On a broader level, the animal healthcare sector is categorised into three segments - pharmaceuticals, veterinary services, and medical devices. The industry caters to the needs of both farm animals including cattle, pigs, poultry, sheep, and companion animals such as cats, dogs, and horses.


The global animal healthcare market is estimated at US$ 51 billion in 2020 and is forecasted to grow at a CAGR of 5% between 2021 and 2027. Substantial rise in demand for protein along with increase in prevalence of food-borne and zoonotic diseases globally are expected to drive the growth of this industry, promoting companies to undertake consistent efforts with an aim of controlling pathogen contamination risks by producing quality pharmaceutical products including vaccines.

To overcome this, 25 Global and 6 Indian initiatives supported by collaboration strategies have been undertaken for disease prevention, under One Health. One Health, an initiative established by Centers for Disease Control and Prevention (CDC), recognises that health of animals, humans, and ecosystems are interconnected. Hence, to achieve common public health goals, One Health encourages collaboration among countries across the globe. Therefore, increasing number of government initiatives to support animal healthcare and growing awareness among animal farmers and pet parents are expected to drive the demand for animal healthcare products in the years to come.

Production Animals

Production animal (An animal that provides output of sale other than its progeny) segment was valued at US$ 32 billion in 2020 and is estimated to reach US$ 39 billion by 2027, driven by increasing consumption of milk, meat, and other animal byproducts.

The segment dominated the global animal health market in 2020 with a revenue share of ~62% led by increasing food safety concerns of both consumers and government healthcare organisations. Policymakers worldwide are striving to attain food security by boosting large-scale food production and hence, greater rearing of livestock.

Companion Animals

Growing household income has contributed to rising inclination towards pet ownership. Moreover, factors like increased urbanisation, nuclear families, families with fewer or no children are creating a need for social support. With rising companion animal ownership, owners are becoming aware of pet nutrition and health which promotes them to routinely seek veterinary services.

Trends in Animal Healthcare

Future of animal healthcare industry is likely to be impacted by the following factors:

1. Increased emphasis on animal nutrition:

Companies in the animal healthcare industry are divided into two segments - one that produces pet food to keep the companion animals healthy while the other makes therapeutic products along with complete range of animal feed products for the farm animals.

Growing pet ownership coupled with treating pets as a family member has contributed to the rising demand for quality healthcare of the companion animals. To cater to the ever-increasing human population, the animal husbandry segment is witnessing the highest ever demand for its products which in turn is driving the growth of production animal healthcare segment.

2. Growing Digitisation:

The online sale of animal healthcare products is expected to grow at a CAGR of 4.8% till 2027. Rising internet penetration, customer convenience and inclination towards the discounted medicines prices will be among the growth drivers for the digital segment.

3. Increasing pet adoption:

Despite the pet adoption rate being stable in developed countries, it has been exploding in the developing countries driven by factors such as rising disposable income among middle-income households coupled with changing attitudes towards pets. Consumers are influenced by varying trends around them in areas of health and wellness, and are keen to ensure that their pets receive products which contain healthy and wholesome ingredients that provide proper nutrients to their loved ones.

About SeQuent Scientific Limited

Over the last few years, we have emerged as Indias largest global animal health company with presence in 100+ countries. Our eight manufacturing facilities based in India, Spain, Germany, Brazil, and Turkey have approvals from top global regulatory bodies, including USFDA, EUGMP, WHO, TGA, among others. We offer a comprehensive portfolio across formulations, Active Pharmaceutical Ingredients (API), and provide analytical services to the pharmaceutical and life sciences industry.

Business performance review

Active Pharmaceutical Ingredient (API)

Key Highlights

Particulars FY 21 Developments Total Products
Commercialised 3 30
USVMF Filing 4 23
CEP Approval 1 11


Categories Initiatives
Partnerships CDMO project initiated with a leading AH company
Supply Chain Security Focus on indigenous development of key KSMs

API Growth Drivers

a. Vizag expansion: The project was initiated to meet the estimated FY22 demand. We estimate to invest around 760 million over the next 24 months. We completed the first phase of expansion and the capacity is now onstream.

b. De-bottlenecking at Mahad: We completed the de-bottlenecking project at Mahad plant which enhanced our Albendazole capacities. We believe this will enable us to serve the increased demand of our customers.

c. Deepening relationship with global top 10 players: In FY21, over a third of our sales came from the global top 10 animal health companies, and two third of our sales were to regulated markets. We continue to strategically engage with top animal health companies as part of our long-term strategy.


Key Highlights

a. New launches:

Halofusol - In FY21, we launched Halofusol, our in-house developed oral solution for European countries. The product was developed at our R&D facility in Barcelona, Spain and will be manufactured at our Spanish facility.

Citramox LA - In FY21, we also launched of Citramox LA for cattle and pigs in multiple European countries. It was the first generic version of Vetrimoxin LA to be approved and commercialised in Europe. Citramox will be our first long-acting injectable to be launched in Europe.

b. Multi-year agreement with Zoetis: We signed a multi-year distribution agreement with Zoetis for their ruminant portfolio in India. The distribution of the products started in Q2 FY21. The portfolio consists of 13 brands covering the therapeutic areas of antibiotics, parasiticides, hormones, and vaccines.

Formulation Growth Drivers

a. Entry into U.S. market: We have already made our first filing in the US. However, the first commercialisation will be delayed in comparison to our initial plan as we believe that the FDA may not visit for the next 12 months to 18 months.

b. Expanding our reach: We completed integration of Zoetis portfolio into our offering along with starting operations in two southern states which will enable us to expand our India business.

c. Bremer expansion: We started capability and capacity expansion of our injectable facility in Bremer, Germany which was deferred due to lockdown challenges in Europe.

Analytical Services

SeQuent Research Limited, our wholly-owned subsidiary is a prominent Contract Research Organisation focusing on Analytical and Development Services. Our USFDA approved analytical service centre is in Mangalore. With ~70 scientists, we have robust capability in instrumental analysis, wet laboratory research, trace element analysis, and a Laboratory Information Management System (LIMS) which complies with the 21 Code of Federal Regulations.

Our focus markets and opportunities

We are addressing global animal health challenges to ensure food security for the worlds ever-increasing population with a focus on becoming a value leader in our sector. We clearly see immense opportunities to expand our presence in markets where we have an established front-end setup.


Market statistics

• Indian animal health is estimated at US$1 billion and is expected to grow at a CAGR of +8.9%

• Livestock contributes ~ 4% to Indias GDP, making it a crucial farm activity for the large rural population

Our presence today

Over the years, SeQuent expanded presence in the ruminants & poulty segment. The business was impacted at the start of FY21 due to the first wave but started getting traction from Q2FY21. In particular, our formulations portfolio, accelerated growth in FY21 & grew by 98.4% on a YoY basis from 391 million to 776 million in FY21. This increase in revenues allowed us to gain market share.

Growth drivers

Leveraging the Zoetis portfolio to extent the reach of our products

• The portfolio has brands that have a strong brand value and are expected to complement our portfolio, giving our India business a further fillip in the medium term

Increased market penetration

• We started field force operations in Karnataka and Kerala to expand presence in the domestic market Companion animal

• We supplemented our existing business with a new business vertical focused on companion animals and expect it to be our next growth driver


Market statistics

• Second largest animal health market and is expected to grow at a CAGR of 4.8%

• The growth is expected to be driven by high disposable income, an increasing number of companion animals, and the need for efficient animal husbandry practices to meet the demand for meat protein

Our presence today

• E.U. recorded a steady growth of 3.8% on back of strong business performance in the Benelux region. The growth was also attributable to new products launches, including Thulathromycin, Citramox LA, Halofusol

• We consolidated our holdings in Fendigo SA & Fendigo BV which have their operations in Belgium & Netherlands respectively during the year, thereby making it a wholly-owned subsidiary

Growth drivers

• We have started up-gradation of our German facility which will enable us to service the growing European demand along with US commercialisation

• Our consolidation of Fendigo in FY21 are expected to augment our revenue from regulated markets

• We implemented SAP in our Spanish facility and will extend to other facilities in FY22 with an aim of streamlining our operations.


Market statistics

• Turkey had approximately 17 million cattle, 42 million sheep, and 11 million goats in 2020

Our presence today

• SeQuent is the third largest animal pharma company and the largest local animal healthcare manufacturer

• We have our manufacturing plant in Ankara which comprises of multiple manufacturing lines of various dosage forms, including injectables, oral solutions, aerosols, catering to the ruminant segment. We also launched multiple products during the year allowing us to gain market share

• During the year, we acquired the balance 40% stake in Provet, making it a wholly-owned subsidiary

Growth drivers

• We expect consolidation of our Turkish subsidiary will enable us to have greater focus on the Turkish market

• We received EUGMP approval for the tablets manufacturing line which will allow us to further expand the range of products currently being marketed in the regulated market


Market statistics

• As of 2020, Latin America accounted for an 11% share of the global animal healthcare market and is expected to grow at a CAGR of 5.5% by 2025.

Our presence today

• We have direct presence in Brazil and Mexico.

• Our Brazilian facility primarily manufactures oral dosages. Our growth was supported by new launches and market share gain in several product categories during the year.

• We also bought out licenses of certain key products to fill the gaps in our portfolio.

Growth drivers

• Continue acquisition of licenses in the near term

• Entry into the companion segment


Our presence today

• We market our products in several Emerging Markets. However in FY21, we adopted a conservative approach in some emerging markets due to stagnant collections, the uncertain impact of lockdowns, and local currency fluctuations against the U.S. dollar. We expect Emerging Markets to return to the pre - pandemic growth in FY22.

Strategic initiatives and performance in F.Y. 2020-21

F.Y. 2020-21 has been an eventful year in more ways than one in terms of change of control with on boarding of Carlyle, engaging experts to reorient strategic plan & identifying areas to focus on operational efficiencies.

We delivered our revenue and margin guidance of high-teen growth and 200 bps margin expansion during the year with revenue growth of 15.5% and EBITDA margin expansion of 250 bps.

Formulations was the backbone of this strong growth, delivering revenue growth of 16.3% in FY 21 to Rs.9,055 million as compared to Rs.7,789 million in FY 20 led by growth in the key markets of LATAM, Turkey and India.

As part of our focus on strengthening our engagement with top global animat health companies, the API revenues grew by 13.9% to Rs.4,561 million in FY 21 as against Rs.4,004 million in FY 20.

We consolidated our minority holdings in Provet (Turkey) and Fendigo (Benelux) which reflects our confidence in the growth potential of these businesses. We sold our treasury holding in Strides Pharma Science Limited to fund the acquisition of minority holding in Turkey and for our debt repayment.

Over the past few years, our focus was on expanding presence in key animal health markets along with achieving operational efficiencies. Hence, we believe what weve achieved in Sequent 1.0 isnt easy to replicate. We now begin our journey ahead of SeQuent 2.0 with purpose and confidence. We see SeQuent 2.0 to be no different from 1.0, except that it comes with a bolder vision backed by a strategic global investor, valuable commercial and technical experience of a well-diversified board. Going forward, we se SeQuent 2.0 to be bigger, bolder, more ambitious.

Moreover, our relentless focus on improving financial performance and reducing debt led to India Ratings upgrading the long-term credit rating from IND A- (Stable) to IND A+(Positive). Our strong business model coupled with a diversified revenue mix is what made this possible.

Also, we reduced our net debt significantly in the fiscal. This is expected to substantially reduce our finance cost going forward. A robust cash flow generation, which we believe our strong business verticals will sustain, should make the company net debt-free within next 2 years.

We hired Stonehaven Consulting, a niche animal health consulting firm, to help us finalise a blueprint for the Sequent 2.0 journey. We believe that inputs from Stonehaven will put us on an aspirational path of being among the top 10 global animal health companies. Also, our engagement with PwC is targeted to drive operational excellence, for manufacturing plants of Spain and India.

Alivira was awarded the best Company in Animal Health from India, Middle East, and Africa Region for the second consecutive year by IHS Markit Animal Health. Moreover, within the sixth year of our business, not only are we the largest from India but also amongst the Top 20 animal healthcare players across the globe.

All the successes have happened despite the company going through a ownership change and the headwinds due to COVID-19. This clearly demonstrates the strength of our business model.

Business Outlook

The seamless transition to the Carlyle Group as the new promoter, engagement with Stonehaven to finalise our growth strategy and hiring of PwC to rationalise cost will together pave the way for SeQuent 2.0.

Business Resources

We globally operate eight world-class manufacturing facilities.

Following is a list of our facilities:

Business vertical Location Key features
Animal Flealth APIs India Approvals: USFDA, WHO-Geneva and EU GMP Capabilities: API facility with reactor capacity of 270 KL with seven clean rooms
India Approvals: EU GMP, COFEPRIS Mexico and WHO Capabilities: 23 reactors having a cumulative capacity of 76KL
API Intermediates India Approvals: cGMP Capabilities: API intermediates facility with reactor capacity of 64 KL with two clean rooms
Formulations Spain Approvals: EU GMP Capabilities: Liquids - oral solutions/suspension and solids (powders) - beta- lactam and non-beta lactam antibiotics. Specialises in nutrition products - veterinary premixes
Germany Approvals: EU GMP Capabilities: Sterile injectable including beta-lactam and hormones, oral liquids and oral powders
Turkey Approvals: EU GMP and Turkish GMP Capabilities: Multiple dosage forms including Beta-lactam and non-beta lactam injectable solutions/ suspensions, intra-mammaries, oral solutions/ suspensions, aerosol and pour- on
Brazil Approvals: MAPA (Ministry of Agriculture, Livestock and Supply) Capabilities: Oral solutions, oral powders and drug premixes
India Approvals: India, Uganda, Ethiopia and Kenya Capabilities: Granules for injections and oral liquids

Research and development (R&D)

Keeping in mind our focus on regulated market, we have substantially enhanced our R&D capabilities with focus on regulated market commercialisations. Led by the strong R&D team, we have built a comprehensive portfolio of API and formulations.

In formulations, we are working on a pipeline of over 35+ products with a focus on the regulated markets.

In API, we have 23 USVMF filings and 11 CEP approvals in Europe, along with 8+ products in the pipeline.


We believe that our 1900+ employees are the foundation of our business and we focus on providing them with equal opportunity and supporting them to achieve greater success in their career. All throughout managing our business functions, our primary emphasis in COVID times was on the "safety and well-being" of our team, which is the foundation of our employee first approach and will continue to be our priority going forward.

Employee Stock Option Plan (ESOP)

With an aim to align the interest of leadership team to the long-term goals of the Company and Shareholders and enhance our ability to attract and retain new global talent, we introduced the new ESOP scheme. The scheme is spread over 7 years to ensure employees stickiness. The ESOPs has 3 classes based on performance criteria namely retention/ continuity, share-holder outcome and Individual targets. The initial grant is at 786/- per share, i.e. the price paid by Carlyle to acquire controlling interest in SeQuent. Maximum options that can be granted under the ESOP scheme is 18.5 million stock options each convertible into 1 equity share of 72/-, constituting 6.93% of the fully diluted share capital.

The accounting for the said scheme is to be done as per the fair value method determined by the Black Scholes model for option valuation. The accounting impact of the said ESOP issuance would range between 71.6 billion to 71.85 billion depending upon the then prevailing stock price, the time value and the vesting period.

On account of the above mentioned ESOP scheme coming in force during the FY 2021, the Company has discontinued issuance of ESOPs under the earlier ESOP scheme, namely SeQuent Scientific Employee Stock Option Scheme 2010.


Policy on Prevention of Sexual Harassment

We are committed to promoting a healthy working environment free from discrimination, harassment and intimidation. Therefore, we have established a Sexual Harassment Prevention Committee (SHPC) for every location, that will hold a meeting within five days of the receipt of the complaint in a confidential manner.

There were no cases reported to the Sexual Harassment Prevention Committee during the year under review.

Sequent Whistle Blower Policy

The Company has formulated a Whistle Blower Policy for the purpose of curbing and reporting any improper or unethical behavior/ practices or alleged wrongful conduct or violation of Code of Conduct of the Company or applicable laws, frauds, bribery, corruption, employee misconduct, illegality, health, safety & environmental issues or misappropriation of Company funds or assets within the Company or by the Company. In the event of a leak of unpublished price sensitive information or a suspicion of a leak of unpublished price sensitive information, policies and procedures for investigation have been established. The companys hiring and other personnel policies include the clause for shielding "whistle blowers" from wrongful firing and other discriminatory employment practises.

The Company affirms that in FY21, it has not denied any personnel access to the Whistle Blower Mechanism.

Environment, Health and Safety (EHS)

We consider EHS as the responsibility of management and the employees. We conduct our operations keeping in mind the impact it would have on Environment, Health, and Safety of Employees, Customers and the Community.

Also we have incorporated an EHS policy under which we are committed to comply with all the statutory requirements covered in EHS. We aim to foster a sense of responsibility for EHS among our employees along with imparting appropriate training and sharing information to develop their EHS skills so that every employee can comply with the EHS laws applicable to his/her area of operations.

We strive for continual improvement in our EHS performance and measure progress and verify compliance through management reviews and audits.

Global presence and marketing

In several key animal health markets, (ike Europe and Turkey, we have strategically build local sales force of technical experts and veterinarians. Over the years, we expanded the reach of our portfolio to 80+ countries through a judicious mix of direct sales presence and distributor. The said distribution channels enable us to effectively serve our customers where we dont have on-ground presence.

Threats, Risks and concerns

The company faces a variety of risks in the conduct of business, which along their mitigants are discussed below.

Risk and its Definition Risk Mitigation
Regulatory risk: An adverse facility inspection by any regulatory body may cause restriction in sales to certain customers or respective geographies. We have established systems to monitor compliance at all times. Our employees receive training on compliance updates for confirming to them at all times.
Environment, Health and Safety (EHS): Because the Group s manufacturing activities involve sophisticated chemical reactions, there are risks associated with operational safety and environmental compliance. The Groups policies and practises are established and reviewed on a regular basis to ensure that they comply with all applicable environmental, health, and safety standards. The Group focuses on optimally using its resources and continually update its processes to reduce the environmental effect of its operations, products, and services.
Currency volatility risk: Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group manages its foreign currency risk by hedging transactions in geographies where its operations are in currencies other the local currency.
Interest rate risk: The Groups borrowings are on a floating rate basis, hence any changes in interest rates can have an influence on the Groups performance. All the local entities of the Group borrow in local currencies tied to the respective base rates in line with their domestic businesses.
Credit Risk: The Groups financial assets are subject to credit risk. The customers credit terms vary depending on market factors in different parts of the world. Financial assets are also subject to counterparty credit risk. The organisation examines receivables ageing in each geography on a regular basis. Credit restrictions based on a standard model have been established, along with a suitable Delegation of Authority (DOA) matrix for releasing credit blocks.
Liquidity risk: Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group targets adequate leverage ratios to ensure low liquidity risk.
Information Technology & Cyber Security Risk: For its global operations, the Group is heavily reliant on IT systems. IT infrastructure monitoring and review, database management, IT policy, cyber security, and compliance are all localised, so any threat to infrastructure or data is addressed locally.
Market risk: Market risks are the possibilities of losses as a result of price fluctuations. Market risks are the possibilities of losses as a result of price fluctuations. Geopolitical events, foreign exchange fluctuations, worldwide pandemics, and other events can all have an impact on market movements. The Board evaluates the Groups investments from a long-term strategic viewpoint, while the Group monitors geopolitical risk on a continuous basis.

Financial Review

Consolidated Balance Sheet for the year ended March 31, 2021

(In Rs. Million)
Particulars IHHI F.Y. 2020-21 F.Y. 20I9-20 Movement
1. Non-current assets
a) Property, plant and equipment 3,190.73 3,449.07 (258.34)
b) Capital work-in-progress 287.83 110.65 177.18
c) Goodwill 1,742.01 1,823.18 (81.17
d) Other intangible assets 433.39 493.45 (60.06
e) Intangible assets under development 10.52 23.59 (13.07
f) Financial assets
i. Investments 769.39 1,312.88 (543.49)
ii. Other financial assets 48.94 68.03 (19.09)
g) Deferred tax assets (net) 205.07 232.40 (27.33)
h) Income tax assets (net) 91.76 56.81 34.95
i) Other non-current assets 10.10 15.03 (4.93)
Total non-current assets 6,789.74 7,585.09 (795.35)
2. Current assets
a) Inventories 2,643.57 2,194.17 449.4
b) Financial assets
i. Investments 56.55 401.79 (345.24)
ii. Trade receivables 3,461.37 3,187.64 273.73
iii. Cash and cash equivalents 537.44 680.96 (143.52)


(In Rs. Million)
Particulars F.Y. 2020-21 F.Y. 2019-20 Movement
iv. Bank balances other than (iii) above 24.52 77.29 (52.77)
v. Loans 1.90 3.48 (1.58)
vi. Other financial assets 107.63 101.53 6.10
c) Income tax assets (net) 4.53 7.27 (2.74
d) Other current assets 298.34 387.24 (88.90)
Total current assets 7,135.85 7,041.37 94.48
Total Assets 13,925.59 14,626.46 (700.87)
1. Equity
a) Equity share capital 496.74 496.74 -
b) Other Equity 6,779.77 6,374.30 405.47
Equity attributable to owners of the Company 7,276.51 6,871.04 405.47
c) Non-controlling interest 486.65 447.37 39.28
Total equity 7,763.16 7,318.41 444.75
II. Liabilities
1. Non-current liabilities
a) liabilities Financial
i. Borrowings 937.06 1,500.59 (563.53)
ii. Other financial liabilities 453.97 668.43 (214.46)
b) Provisions 84.37 95.69 (11.32)
c) Deferred tax liabilities (net) 69.30 83.22 (13.92)
d) Other non-current liabilities 8.69 13.13 (4.44)
Total non-current liabilities 1,553.39 2,361.06 (807.67)
2. Current liabilities
a) Financial liabilities
i. Borrowings 1,029.05 1,471.21 (442.16)
ii. Trade payables 2,295.64 2,203.80 91.84
iii. Other financial liabilities 823.36 881.40 (58.04)
b) Provisions 51.45 25.49 25.96
c) Current tax liabilities (net) 226.55 196.65 29.90
d) Other current liabilities 182.99 168.44 14.55
Total current liabilities 4,609.04 4,946.99 (337.95)
Total liabilities 6,162.43 7,308.05 (1,145.62)
Total Equity and Liabilities 13,925.59 14,626.46 (700.87)

Non-current assets

Property, plant and equipment (PPE)

PPE decreased from Rs.3,449.07 million in F.Y. 2019-20 to Rs.3,190.73 million in F.Y. 2020-21 mainly due to depreciation during the year.

Capital work in progress (CWIP)

The CWIP increased from Rs.110.65 million in F.Y. 2019-20 to Rs.287.83 million in F.Y. 2020-21 mainly due to capex spent on India operations.


Goodwill decreased from Rs.1,823.18 million in F.Y. 2019-20 to Rs. 1,742.01 million in F.Y. 2020-21 is resultant of restatement of goodwill due to foreign exchange rate fluctuation. During the year, the Company has reviewed and restated the amounts of foreign currency translation of goodwill arising on acquisition of foreign subsidiaries. Accordingly there is reduction in carrying value of goodwill by Rs.556.56 Mn in year ended 31 March 2020. There is no impact of the above change on the profit after tax for the year.

Other intangible assets

Other intangible assets decreased from Rs.493.45 million in F.Y. 2019-20 to Rs.433.39 million in F.Y. 2020-21 due to amortisation during the year.

Intangible assets under development

The decrease in intangible assets under development from Rs.23.59 million in F.Y. 2019-20 to Rs. 10.52 million in F.Y. 2020-21 is resultant of capitalisation of intangible assets.

Non-current investments

The decrease in non-current investments from Rs.1,312.88 million in F.Y. 2019-20 to Rs.769.39 million in F.Y. 2020-21 is mainly due to sales of share of Strides Pharma Sciences Limited during the year.

Other non-current financial assets

The decrease in non-current financial assets from Rs.68.03 million in F.Y. 2019-20 to Rs.48.94 million in F.Y. 2020-21 is resultant of decrease in margin money due to repayment of term loans.

Current assets

Current investments

The decrease in current investments from Rs.401.79 in F.Y. 2019-20 to Rs.56.55 million in F.Y. 2020-21 is resultant of redemption of investment in mutual fund units by parent and subsidiary companies.

Trade receivables

The increase in trade receivables from Rs.3,187.64 million in F.Y. 2019-20 to Rs.3461.37 million in F.Y. 2020-21 is in line with business growth.

Other current assets

The other current assets have decreased from Rs.387.24 million in F.Y. 2019-20 to Rs.298.34 million in F.Y. 2020-21 due to utilisation of indirect tax credit.


Other Equity

The other equity increased from Rs.6,374.30 million in F.Y. 2019-20 to Rs.6,779.77 million in F.Y. 2020-21. Increased partly due to profitability for the year of the Group and decreased partly due to utilisation of reserves for the acquisition of balance stake in subsidiaries of the company.

Non-controlling interest

The non-controlling interest increased from Rs.447.37 million in F.Y. 2019-20 to Rs.486.65 million in F.Y. 2020-21. The increase in minority is a result of increased performance of subsidiaries having minority interest.

Non-current liabilities

Long-term borrowings

The decrease in long-term borrowings from Rs.1,500.59 million in F.Y. 2019-20 to Rs.937.06 million in F.Y. 2020-21 is mainly due to repayment of borrowings of Indian companies.

Other financial liabilities

The decrease in other financial liabilities from Rs.668.43 million in F.Y. 2019-20 to Rs.453.97 million in F.Y. 2020-21 is mainly due to reclassification of put option liability from non current to current liability which is in line with contractual terms.

Current liabilities

Current borrowings

The decrease in current borrowings from Rs. 1,471.21 million in F.Y. 2019-20 to Rs.1,029.05 million in F.Y. 2020-21 is due to repayment of borrowing in Indian and Turkey operations.

Trade payables

The increase in trade payables from Rs.2,203.80 million in F.Y. 2019-20 to Rs.2,295.64 million in F.Y. 2020-21 is in line with business growth.

Other financial liabilities

The decrease in other current liabilities from Rs.881.40 million in F.Y. 2019-20 to Rs.823.36 million in F.Y. 2020-21 is resultant of recognition of additional put option liabilities and repayment of borrowing.

Consolidated statement of Profit and Loss for the year ended March 31, 2021

Particulars F.Y. 2020-21 F.Y. 2019-20

% change

Revenue from operations 13,616.15 1 1,792.44 15%
Other Income 83.63 100.89 (17%)
Total Income 13,699.78 11,893.33 15%


Particulars j F.Y. 2020-21 F.Y. 2019-20

% change

Cost of materials consumed 5,886.65 5116.99 15%
Purchases of stock-in-trade 1,450.19 888.9 63%
Changes in inventories of finished goods, stock-in-trade and work-in- progress (390.27) 44.62 975%
Employee benefit expenses 1,872.23 1,650.59 13%
Finance costs 243.83 357.14 (32%)
Depreciation and amortisation expenses 505.98 506.22 0%
Other expenses 2,676.65 2,388.12 12%
Total expenses 12,245.26 10,952.58 12%
Profit before exceptional items and tax 1,454.52 940.75 55%
Exceptional items 88.23 -
Profit before tax 1,366.29 940.75 45%
Tax expenses 321.77 120.29 167%
Profit after tax 1,044.52 820.46 27%
Profit after tax for the year attributable to:
- Owners of the Company 954.42 699.05 37%
- Non-controlling interest 90.1 121.41 (26%)

Revenue from operations

The revenue from operations increased from Til,792.44 million in F.Y. 2019-20 to T13,616.15 million in F.Y. 2020-21. This increase is commensurate with further expansion in operations.

Cost of materials consumed

The cost of material consumed, as a percentage to net sales remain in line with previous year.

Employee benefit expense

The employee benefit expenses have increased by 13% on account of the following:

• Average annual salary increase of 8%

• Proportionate increase in staff welfare expenses

• Increase in overall number of employees in the Group

Finance costs

The decrease in finance cost from T357.14 million in F.Y. 2019-20 to Rs.243.83 million in F.Y. 2020-21 is due to repayment of loans and reduction of average interest rate.

Exceptional Items

The exceptional expenses of Rs.88.23 million is due to accelerated vesting of unvested employee stock options, one time bonus announced and winding up of operation in France.

Tax expenses

The increase in tax expenses from T120.29 million to T321.77 million in F.Y. 2020-21.

The effective tax rate is higher than previously anticipated due to delays in assessments in certain countries due to the COVID situation.

Risk Management and Internal Control

In line with the requirements under the SEBI LODR, the Company has constituted a Risk Management Committee of the Directors. The Members of the Committee are Mr. Milind Sarwate, Mr. Neeraj Bharadwaj, and Mr. Tushar Mistry. A meeting of the Risk Management Committee was held on 24th February 2021 in which the current Risk Management process was evaluated and ways and means of strengthening the same were discussed.

The Company has adequate internal controls systems in place which provides reasonable assurance about the integrity and reliability of financial statements.

Additionally, PwC, a leading global audit firm performs periodic internal audits to provide reasonable assurance over internal control effectiveness and advises on industry-wide best practices. The Audit Committee consisting of Independent Directors review important issues raised by the Internal and Statutory Auditors, thereby ensuring that the risk is mitigated appropriately with necessary rectification measures on a periodic basis.

Ethics & Governance Committee: The Company has formed an Ethics & Governance Committee for overseeing policies on anti-money laundering, Anti-bribery and Corruption (ABAC), Counter Terrorist Financing, Whistle Blower Policy, Prevention of Sexual Harassment (POSH) and Insider Trading. During the year, the Company appointed Ropes & Gray, a reputed consultant which trained its employees on anti-money laundering, Anti-bribery and Corruption (ABAC), Counter Terrorist Financing. The Company conducts regular awareness programs to make its employees familiar with the abovementioned policies.

Key Ratios


Particulars F.Y. 2020-21 F.Y. 2019-20
Debtors turnover ratio 3.93 3.70
Inventory turnover ratio 5.15 5.37
Interest coverage ratio* 6.97 3.63
Current ratio 1.83 1.67
Debt equity ratio** 0.22 0.33
Operating margin ratio 15.88% 14.91%
Net profit margin* 7.62% 6.90%
Return on net worth (RONW)* 14.51% 11.63%

*Significant change in interest coverage ratio, net profit margin and RONW is due to improvement in operational efficiency. "Improvement in debt equity ratio is on account of repayment of borrowing in India and Turkey operations.