Shamrock Industrial Co Ltd Management Discussions.
Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2019.
The Management Discussion and Analysis have been included in consonance with the Code of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI). Investors are cautioned that these discussions contain certain forward looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward looking statements expressed in this report consequent to new information or developments, events or otherwise.
The management of the company is presenting herein the overview, opportunities and threats, initiatives by the Company and overall strategy of the company and its outlook for the future. This outlook is based on managements own assessment and it may vary due to future economic and other future developments in the country.
The operational performance and future outlook of the business has been reviewed by the management based on current resources and future development of the Company.
INDUSTRY STRUCTURE AND DEVELOPMENTS:
Pharmaceutical Sector Overview - Global
As per IMS, global spending on medicines is expected to reach $1.4 trillion by F.Y. 2020, representing an increase of 29- 32% from FY 2015. The drivers of this growth will be diverse. In developed markets, brands will be instrumental, while in the pharmacy markets it will be driven by better usage and offset by patent expires. Among the other key drivers to this growth trend are an ageing population and rising occurrence of chronic diseases. Technology and product innovation, increase in government funding and insurance coverage, and the positive impact of healthcare improvement provisions will also contribute. Going forward, by FY 2020, specialty medicines will command an increased share of spending estimated at 36% in developed markets and 12% in Pharmacy.
USA spending on medicines will reach $560-590 billion in FY 2020, seeing an increase of 34% over FY 2015. This growth will be driven by innovation, invoice price increases and exclusivity-loss impact. Generic medicines will continue to be the mainstay of the prescription medicine usage in the USA, rising from 88% to 91-92% of all dispensed prescriptions by FY 2020. However, an increasing share of medicines will be paid for by Medicare, Medicaid, and other government funded or mandated programme each imposing substantial discounts from list prices.
Growth in spending on medicines in pharmacy markets is expected to reach $125 billion by 2020 driven primarily by wider use of medicines. According to IMS Health, Africa is the worlds second fastest growing pharmaceutical market which is expected to reach $30 billion by FY 2017 and $45 billion by FY 2020. The growth will be fuelled by increasing economic wealth and demand for treatments for chronic diseases in more urban, middle-class population.
STATE OF AFFAIRS OF THE COMPANY:
The Company does not have operations for the year under review.
DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE :
Your Companys main activity is cornered in to dealers and manufacturing of pharmaceutical products and services. Since few years your Company is non-operative. The main reason of occurring losses is due to day to day routine Expenses. The management of the Company wants to revive the Company and very optimistic regarding performance of the Company in future and taking every steps and making every efforts to turn the Company in to profitable organization.
|Particulars||F.Y. 2018 2019||F.Y. 2017 2018|
|(Rs. In Lacs)||(Rs. In Lacs)|
|Revenue from Operation||-||-|
|Revenue from other Income||-||3.27|
|Profit before Dep. & Int.||-||(6.41)|
|Profit after Depreciation & Interest||(28.81)||(6.41)|
|Provision for Taxation||-||-|
|Provision for Tax (deferred)||-||-|
|Provision for Taxation for earlier year||-||-|
|Profit/ Loss after Tax||(28.81)||(6.41)|
KEY FINANCIAL RATIOS:
In accordance with the amended SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof:
The Company has identified following ratios as key financial ratios:
|Particular||F.Y. 2018-19||F.Y. 2017-18||% Change|
|Debtors Turnover Ratio||-||-||-|
|Inventory Turnover Ratio||-||-||-|
|Interest Coverage Ratio*1||-||-||-|
|Debt Equity Ratio*3||0.14||1.61||91.30%|
|Operating Profit Margin (%)*4||-||-||-|
|Net Profit Margin (%)*4||-||-||-|
|Return on Net Worth RONW (%)*5||-0.11%||-0.02%||450%|
PERFORMANCE OF THE BOARD AND COMMITTEES:
During the year under review, the performance of the Board & Committees and Individual Director(s) based on the below parameters was satisfactory:
a) Most of the Directors attended the Board meetings;
b) The remunerations paid to executive Directors are strictly as per the company and industry policy.
c) The Independent Directors only received sitting fees.
d) The Independent Directors contributed a lot in the Board and committee deliberation and business and operation of the company and subsidiaries based on their experience and knowledge and Independent views.
e) TheCreditPolicy,Loan Policy and compliances were reviewed periodically;
f) Risk Management Policy was implemented at all critical levels and monitored by the Internal Audit team who places report with the Board and Audit committees.
Globally the average human life span has increased considerably over the last few decades. Though, more infections and diseases have come along with this longevity growth. The aim going forward is to avoid infections and maintain health so that these populations can enjoy better lives.
Hectic daily schedules have led to unhealthy eating habits, lack of exercise, less sleep, and other challenging lifestyle choices. This has resulted in high obesity rates, poor digestion, delusions, breathing difficulties, and other physical problems. Health supplements have been introduced as a cure for all these issues, to reduce the chance of getting sick, and meet daily nutritional needs through vitamins and minerals.
Increased income and chronic diseases
The middle class has been growing in both the emerging and developed markets. People in these markets have more disposable income and expect better healthcare solutions. Chronic disease cases have risen in number. This has made people become more reliant on medications and health supplements.
Increasing role of Government
Governments pivotal and growing role as a regulator and market-shaper in the global healthcare sector cannot be understated. Around the globe, several governments are presenting broad reforms to cut costs and improve the quality of their health care systems.
Pharmaceutical Sector Overview - India
The Indian pharmaceutical industry ranks 14th in the world by value of pharmaceutical products. A significant increase in domestic consumption due to the higher incidence of lifestyle diseases, increasing health awareness, growing population, greater penetration in rural markets, and a nascent, yet fast growing health insurance industry, are some factors influencing the growth of the pharmaceutical market. Moreover, the countrys low-cost production base and the patent cliff in the global arena significantly support the export market which plays an important role in the growth of the industry. The percentage contribution of the generic pharmaceutical market to the world is expected to increase from 28.5% in FY 2013 to 36% in FY 2017. India currently ranks fourth in the world among the highest generic pharmaceuticals producers and contributes 20% of global generic drug exports. Lifestyle segments such as cardiovascular, diabetes, CNS, oncology will continue to be fast growing owing to increased urbanization and change in lifestyle patterns. (Source: IBEF and Pharmexcil) The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value#. Branded generics dominate the pharmaceuticals market, constituting nearly 70 to 80 per cent of the market. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine TenofovirAlafenamide (TAF) for 112 developing countries.
As there are no subsidiaries of the Company, Investment made in Subsidiaries is NIL.
Though the company is not in operation since few years. The Company operates in single reported segment.
THREATS, RISKS AND CONCERNS:
Changing global political and economic conditions
Risk of exposure to various external political and economic conditions exists as well as natural disaster that may hit the Companys work performance and capability to achieve its objectives. Additionally, the Company operates across a broad range of markets and these markets have the potential to come across natural disasters that could impact business operations. The extent of the Companys portfolio and geographic footprint support in mitigating our coverage to any specific localised risk to a certain degree. External uncertainties are carefully measured when developing strategy and reviewing performance.
The Companys products face intense competition from products of other pharmaceutical companies in India and abroad and introduction of new products by competitors may impair the Companys competitive advantage and lead to erosion of revenues.
The Company has unique capabilities to innovate on product offerings across the market customized as per their needs, which gives it an edge over its competition.
Foreign Exchange Risk
The Company derives majority of its revenue in foreign currency, exposing it to fluctuations in currency movements. Such a scenario makes earnings volatile. The Company has laid down a foreign exchange risk policy as per which senior management team reviews and manages the foreign exchange risks in a systematic manner, including regular monitoring of exposures, proper advice from market experts, hedging of exposures, etc. The Companys currency hedging strategies have helped minimize volatility and have helped buffer the impact of currency exchange rate fluctuations.
The Companys operations subject it to compliance with a broad range of decrees and regulatory controls on the development, manufacturing, testing, approval, distribution and marketing of its pharmaceutical products. The Company works globally in complex legal and regulatory environments that often differ among jurisdictions. As the rules and regulations transform or as governmental interpretation of those rules and regulations develop, there is a possibility for the conduct of the Company to be called into question. The Companys internal control framework is designed to help ensure we hold fast to legal and regulatory requirements through constant evaluation. The Company has implemented several mechanisms to monitor and support compliance with legal and regulatory requirements.
INTERNAL CONTROL SYSTEM & ADEQUACY:
The company has adequate internal control system commensurate with its size and business. Company Complies with all Applicable statutes, policies, procedures, listing requirements and management guidelines. It Adheres to applicable accounting standards and polices.
The Company has excellent combination of experienced and talented employees. The Company also undertakes on regular basis various training programmers to keep its employees updated on new technical developments and information which directly results in optimum capacity utilization and cost effectiveness. The Companys relation with its employees continues to be cordial. The Company always reciprocates commitment to its employees in order to motivate them to perform the best.
Outlook The Indian Pharmaceutical Industry has been an important component of the pharmacy sector globally due to the recent changes in patent laws, the rising use of generics, cost competitiveness, and availability of the large scientific talent pool. The outlook for the Pharmaceutical industry remains largely positive over the next few years. India is the largest supplier of cost effective generic medicines to the developed world. With the varied range of medicines available for exports and with the availability of the largest number of approved pharmaceutical manufacturing facilities, India is all set to become the leader of pharmaceutical exports to the world. The augment of pharmaceutical outsourcing and investments by multinational companies, allied with the countrys growing economy, persistent health insurance segment and better healthcare facilities, is expected to drive the markets growth.
Statements in foregoing paragraphs of this report describing the current industry structure, outlook, opportunities, etc., may be construed as "forward looking statements", based on certain assumptions of future events over which the Company exercises no control. Therefore, there can be no guarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be implied by these forward looking statements.