RPG LIFE SCIENCES - Q2 FY 20 - RESULTS - REVIEW

RPG LIFE SCIENCES

Q2 FY 20 RESULTS REVIEW

Management : Harsh VardhanGoenka –Chairman, Chairman,RPG Group
YugalSikri -Managing Director

RPG Life Sciences, a part of RPG Enterprises, is an integrated pharmaceutical company operating in the domestic and international markets in the Branded Formulations, Global Generics and Synthetic APIs space. The company is a research based, pharmaceutical company, producing a wide range of quality, affordable medicines.

Manufacturing: Both API &  Formulations (3 Units)

Employees: ~1160

Sales* : Rs 331 crs

EBIDTA : 34 crs

PBT : Rs 15 crs

Exports : 39%

3 Business Verticals :

DOMESTIC FORMULATIONS :

Comprises of Mass & Specialty Businesses

Mass Business is a Mass-specialty Business with strong ‘Text Book’ brands in Cardio-vascular, Ortho, Neuro and GI therapies

Specialty Business is segment-leading ‘Nephro’ business with newer therapies ‘Onco’ and ‘Uro’ under development

Manufacturing: In-house (Unit at Ankleshwar) & Outsourced

Revenue: Rs196 crs

INTERNATIONAL FORMULATIONS

Niche Focus: Mainly Immuno-suppressants

Main Markets: Europe, Canada, SE Asia, Africa

Manufacturing: EUGMP/WHO Approved Unit at Ankleshwar

Revenue: Rs 67 crs

APIs

·        Both for Captive & External Sales

Manufacturing: TGA/WHO GMP Approved Unit at NaviMumbai

Revenue: Rs68 crs

Manufacturing Facilities

NAVI MUMBAI

•API Plant

•WHO, TGA approved

Ankleshwar, Unit 1

•Formulations Plant

•WHO, EUGMP,Ethiopia, Kenya, Sudan, Nigeria approved

Ankleshwar, Unit 2

•Formulations Plant

•WHO, Kenya, Nigeria approved

Products Under Development

SodiumValproate-EUCTD

AminocaproicAcid–ANDA

Azathioprine–ANDA

MycophenolateMofetil-ANDA

RPGLS: A transformation journey in progress

·        Bio-tech sell-off

·        Brands acquisition

·        Specialty strengthening

·        ANDA filing

·        USFDA approval

·        Portfolio clean-up

·        Growth restoration

·        Profitability upliftment

·        Leadership strengthening

·        Focused investment in Formulations business

·        FY 19: A poor year, after 3 strong years

·        Domestic makes up ~60% of company business

Domestic: Setback in Mass Formulations

Challenges in Mass Business & Actions initiated

Challenges in Mass Business

Market slowdown in represented segments

High reliance on trade; low focus on Rx generation

High in-market inventories, expiries & returns

De-growth of 21%

Loss after 2 years of profits

Gross Margin maintained ~55%

Actions initiated 

Change in business leadership

Renewed focus on Rx generation

Discounts & promotion optimization

Product Portfolio Augmentation : Chronic Therapies; Line Extensions of Legacy Products

Intl. Formulations: Setback in Regulated Market Business

Growth in Emerging Markets by 11%

 Regulated Market business setback due to key customer Teva deciding to drop the product due to internal re prioritization

API: Continues to be a strong cash cow

Consistent Performance for the last 3 years

Quinfamide is the key product and Latin America is the key market

API: Limited Customer & Molecule Base

Challenges Faced

Limited customer & molecule base

Legacy plant not capable of upgradation to regulated market standards

ACTIONS INITIATED

Manufacturing Strategy optimisation -Outsourced manufacturing initiated with USFDA approved API suppliers for key molecules

US DMF approval for Azathioprine received; source change process started

Strong growth & profitability

Good demand momentum for exports

FY19: Improvements visible in H2

Strategy Forward: Continued focus on Formulations

Focus : Downstream integration for formulation business; selective market expansion

Strategy : Own technology; judicious mix of In house and outsourced manufacturing

Focus: Above market growth with strong profitability

Strategy:  Product portfolio augmentation, Prescriber base expansion, Field force capability building

Focus: Growth/ Entry in regulated/B2C markets

Strategy: Niche products pipeline, Partnership for NPD; USFDA approval of the plant

RPG LS	Sep '19	Jun '19	Mar '19	Dec '18	Sep '18	YOY	QOQ
Net Sales	98.49	94	69	91	91	8.83	4.7
Interest	0.36	0.73	0.91	0.99	1.05	-65.7	-50.7
P/L Before Tax	12.04	11	2.1	7.3	3.1	288	11
Tax	2.27	2.51	0.58	1.97	0.94	141	-9.6
Net Profit	9.77	8.35	1.54	5.28	2.16	352.31	17.01
Equity	13.23	13.23	13.23	13.23	13.23	0	0
Basic EPS	5.91	5.05	0.93	3.19	1.31	351.15	17.03
Diluted EPS	5.91	5.05	0.93	3.19	1.31	351	17
NSE
Nov 15,	278.35	(+2.81%)		VOLUME 110030
PE	11.8
52 Wk L/H	55	319
Face Value (RS)	8
EPS (TTM)	15.08

MANPASAND BEVERAGES - A REVIEW BEFORE Q4 RESULTS - INVESTOR PRESENTATION

MANPASAND BEVERAGES

Ø Manpasand Beverages is a fruit Juice manufacturer. It is India’s first listed pure-play beverage Company.

Ø It has had spectacular growth in the last 5 years. 

Ø Net Sales has increased from Rs.240 Cr in FY 13, to Rs.294 Cr in FY 14, to Rs.360 Cr in FY 15, to Rs.557 Cr in FY 16 to Rs.701 Cr in FY 17 – 3 times. 

Ø Net profits have increased impressively from Rs.22 Cr, to Rs.73 Cr.- 3 times 

Ø Dividend at 10% p.a. very Low. Manapasand has to improve.

Ø Equity has grown from Rs.2.5 cr to Rs.57.22 cr. 

Ø Reserves have grown from Rs.72 cr to Rs.1096 Cr.

Ø In first 3 quarters of the FY 18, the net sales amounted to Rs.564 Cr. So, it is quite likely to exceed last year”s Sales significantly by the addition of Q4 Sales.

Ø Net profit in first 3 quarters amounts to 57 cr.

Ø Q4 and Q1 quarters record heaviest sales and heaviest net profits generally in this  seasonal business. 

Ø Overall Annual sales and annual net profits are likely to be much better than last year.

Ø Shri. Dhirendra Singh, who has built one of India’s fastest growing fruit juices company. 

Ø It is focusing on segments which have been hitherto ignored by big players, covering the road less travelled. 

Ø Its beverage brands are present in over 20 states through more than 400,000 retailers, over 2500 distributors and 200 plus super stockists. 

Ø company has 7 operational manufacturing facilities: 3 at Vadodara , 2 at Varanasi and 1 each in Dehradun & Ambala. 

Ø 4 new manufacturing units coming up soon at Sri City etc.

Ø to double its production capacity in the coming 12 months and reach out to newer markets, especially in north-eastern and southern India and south Markets.

Ø Pricing can be a defining factor. 

Ø Real differentiator is the innovative taste and flavours based on consumer preferences.

Ø Innovation is a key driver. Manpasand has intensive R&D to bring out nutritious and healthier fruit drinks.

Ø Combinations of Fruits and Vegetable Juices; Local flavours

Ø High-speed PET bottle lines and tetra pack lines - at multiple locations to ensure delivery of round the clock. 

Ø desired standards of quality and food safety -  top priority.

Ø Its newest brand “Siznal” offers a range of innovative juices that are a blend of fruits and vegetables Plus honey. 

Ø It doesn’t contain any preservatives or added sugar. 

Ø bold flavours + nourishment + nutrition + taste.

Ø Its current Brands are : MANGOSIP, FRUITSUP CARBONATED, FRUITSUP JUICE, JEERASIP, APRILLA, ORS, SIZNAL,X-CITE, OXYSIP

Ø TIE UPs with Walmart, Aditya Birla Retail, Reliance Mart, SPAR,IRCTC,Parle,W H SMITH and RELAY For Airport space etc . 

Ø ‘MANGO SIP’ became one of the fastest selling mango based drinks at all Walmart India and SPAR India outlets. 

Ø AUDITOR QUITS : On May 27,Deloitte Haskins & Sells quit as  auditor, a few days before the declaration of annual results on May 30, due to lack of certain information to be provided by the company 

Ø Many mutual fund schemes seem to have exposure to the company.

Ø Ever since its auditor quit on May 27, some brokerages—have withdrawn their rating on the stock.

Ø WHY AUDITOR QUIT : No clear reasons are available for the Auditor quitting. From various media info, the company was doing well in the 4^th quarter and there was no cause for alarm on operational front. The company is erecting 4 New factories and therefore was not able to give some info to Auditor, to finish Auditing before May,30. But, Board scheduled its meeting on May,30^th,the last prescribed date, for considering AUDITED ACCOUNTS & DIVIDEND. Auditor refused to certify before May,30^th, without full Info. Therefore they quit. We still do not know full details.

Ø COMPANY CLARIFIES : ON June,6^th, company clarified that it has  not received any queries from SEBI or MCA. Deloitte was auditing for last 8 years, and never raised any concerns.

Ø NEW STATUTORY AUDITOR : M/s., Mehra Goel & Co, are appointed a as New Auditors. The final approval for accounts by the new auditor and Board meeting to further approve the same will happen in due course.

Ø SEBI has ordered additional surveillance measures due to the steel fall in the Market price etc.

Ø On May 31, stock exchanges released a list of 109 stocks on which additional trading curbs were to be imposed. 

Ø Sources say the market regulator will analyse trade data for the past few sessions to establish if any individuals or corporates made unlawful gains. Circuit filter is at 5%.

Ø Future of MANPASAND : The future of Manpasand appears to be quite safe, despite resignation of Deloite on some technical grounds unrelated to performance or materiality of info.

Ø BALANCE : Company must maintain all info above board in future. Its  performance seems to be OK. Its expansions schemes seem impressive. There is still scope for further expansion.