MIRA
INFORM REPORT
|
Report Date : |
12.11.2007 |
IDENTIFICATION
DETAILS
|
Correct Name : |
DR. REDDYS LABORATORIES LIMITED |
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Registered Office : |
7-1-27, Ameerpet,
Hyderabad – 500 016, Andhra Pradesh |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
24.02.1984 |
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Com. Reg. No.: |
01-4507 |
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CIN No.: [Company
Identification No.] |
L85195AP1984PLC004507 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
HYDD00080D |
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Legal Form : |
Public limited
liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Manufacturers and
Sellers of Bulk Drugs, Formulations and Diagnostic Reagents and Kits. |
RATING &
COMMENTS
|
MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 170000000 |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is an
old, well-established and reputed company engaged in manufacturing and
marketing of pharmaceuticals. The company
manufactures wide range of pharmaceutical products in India and
overseas. The company is making
satisfactory progress in its business and profitability. Directors are well-experienced and
resourceful businessmen. Their trade
relations are fair. Payments are
usually correct and as per commitments.
It can be
considered good for business dealings at usual trade terms and conditions. |
LOCATIONS
|
Registered
Office / Corporate Office : |
7-1-27, Ameerpet,
Hyderabad – 500 016, Andhra Pradesh, India |
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Tel. No.: |
91-40-23731946/23731397/26511723 |
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Fax No.: |
91-40-23731955/23734504 |
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E-Mail : |
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Website : |
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Administrative
Office: |
FTO Unit VII (SEZ
Unit), Andhra Pradesh, India |
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Plants (In
India) : |
Bulk
Drugs – I, II, III and IV · Plot Nos. 137, 138 & 146, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh · Plot Nos. 110 & 111, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh · Plot Nos. 116, IDA Bollarum, Jinnaram Mandal, Medak District - 502 320, Andhra Pradesh · Plot No. 9/A, Phase III, IDA Jeedimetla Ranga Reddy District – 500 055, Andhra Pradesh · Bulk Drugs – V Peddadevulapally, Tripuraram Mandal, Nalgonda District – 508207, Andhra
Pradesh, India · Bulk Drugs – VI IDA Pydibheemavaram, Ransthal
Mandal, Srikakulam District – 532409, Andhra Pradesh · Bulk Drugs – IX IDA
Pydibheemavaram, Ransthal Mandal, Srikakularrf Dist, AP 532 409 Formulations · I – IDA Bollaram Jinnaram Mandal, Medak District – 502320, Andhra Pradesh, India · II- Survey No. 42, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500123, Andhra Pradesh, India · III – R S No. 63/3 and 63/4, Thiruvandarkoil Mannvipet, Pondicherry – 605102, Tamil Nadu, India · IV – Ward – F, Block –4, Adavipolam, Yanam, Pondicherry – 533465, Tamil Nadu, India · V – Plot No. A-3 to A-6, Phase 1-A, Verna Industiral Estate, Verna, Goa – 403722 · VI – Khol, Nalagarh, Solan, Nalagarh Road, Baddi – 173205, Himachal Pradesh Generics · Survey No. 41, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500043, Andhra Pradesh, India Boitech/Critical Care/Diagnostics · Survey No.47, Bachupally Quthbullapur Mandal, Ranga Reddy District – 500043, Andhra Pradesh, India Custom Chemical Services/Discovery
Research · Bollaram Road, Miyapure, Hyderabad – 500050, Andhra Pradesh, India |
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Plants
(Outside India) : |
Riverview Road,
Beverly, East Yorkshire, HU 17 Old United Kingdom Huangpujiangzhonglu
Kunshan Economic and Technologica Development Zone, Jiangsu Province, China 208-214, York
Road, Battersea, London, SW 11-3SD, United Kingdom |
DIRECTORS
|
Name : |
Dr. K. Anji Reddy |
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Designation : |
Executive Chairman |
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Name : |
Mr. G.V. Prasad |
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Designation : |
Vice Chariman and Chief Executive Officer |
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Name : |
Mr. Satish Reddy |
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Designation : |
Director |
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Name : |
Dr. P. Satyanarayana Rao |
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Designation : |
Director |
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Name : |
Dr. V. Mohan |
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Designation : |
Director |
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Name : |
Dr. Omkar Goswami |
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Designation : |
Director |
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Name : |
Mr. Ravi Bhoothalingam |
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Designation : |
Director |
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Name : |
Mr. P.N. Devarajan |
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Designation : |
Director |
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Name : |
Dr. A. Venkateswarlu |
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Designation : |
Director |
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Name : |
Mr. Krishna G. Palepu |
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Designation : |
Director |
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Name : |
Mr. Anupam Puri |
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Designation : |
Non – Executive Director |
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Name : |
Mr. J P Moreau |
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Designation : |
Director |
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Name : |
Mrs. Kalpana Morparia |
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Designation : |
Director |
KEY EXECUTIVES
|
Name |
Mr. K. Satish Reddy |
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Designation |
Managing Director & Chief Operating Officer |
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Age |
33 years |
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Qualification |
B. Tech., M. S. |
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Experience |
9 years |
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Date of
Joining |
18th January, 1993 |
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Previous
Employment |
Director – Globe Organics Limited |
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Other
Directorships |
1. Diana Hotels
Limited 2. DRL Investments
Limited 3. Compact
Electric Limited 4. Cheminor
Investments Limited |
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Name |
Dr. K. Anji Reddy |
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Designation |
Executive Chairman |
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Age |
61 years |
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Qualification |
B. Sc. (Tech.), Ph. D. |
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Experience |
31 years |
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Date of
Joining |
1st September, 1986 |
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Previous
Employment |
Managing Director – Standard Organics Limited |
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Other
Directorships |
1. Diana Hotels
Limited 2. ICICI Venture
Funds 3. Deccan
Hospitals Corporation Limited 4. Biotech
Consortium India Limited 5. Viral
Therapeutic, Inc. |
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Name |
Mr. G V. Prasad |
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Designation |
Executive Vice Chairman and CEO |
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Name |
Mr. V. S. Vasudevan |
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Designation |
Chief Financial Officer |
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Name |
Dr. R. Rajagopalan |
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Designation |
President |
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Name |
Mr. Arun Sawhney |
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Designation |
President |
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Name |
Mr. Abhijit Mukherjee |
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Designation |
President |
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Name |
Mr. K. B. Sankara Rao |
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Designation |
Executive Vice President |
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Name |
Mr. Saumen Chakraborthy |
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Designation |
Executive Vice President |
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Name |
Mr. S. Venkatraman |
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Designation |
Senior Vice President |
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Name |
Mr. Vilas M. Dholye |
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Designation |
Senior Vice President |
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Name |
Mr. Ashwani Kumar Malhotra |
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Designation |
Senior Vice President |
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Name |
Mr. C. V. Narayana Rao |
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Designation |
Vice President |
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Name |
Mr. Ranjan Chakraborthy |
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Designation |
Vice President |
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Name |
Dr. N. R. Srinivas |
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Designation |
Vice President |
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Name |
Dr. Javed Iqbal |
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Designation |
Distinguish Research Scientist |
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Name |
Mr. Jaspal Singh Bajwa |
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Designation |
President |
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Name |
Dr. Jayaram Chigurupati |
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Designation |
Executive Vice President |
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Name |
Dr. G. Om Reddy |
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Designation |
Senior Vice President |
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Name |
Mr. B.R. Reddy |
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Designation |
Senior Vice President |
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Name |
Mr. Arvind Vasudeva |
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Designation |
Vice President |
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Name |
Dr. M. Satyanarayana Reddy |
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Designation |
Vice President |
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Name |
Dr. R. Buchi Reddy |
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Designation |
General Manager |
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Brief Profile of Dr. K. Anji Reddy:
He is the founder
and the Executive Chairman of Dr. Reddy’s Laboratories Limited. He is also the founder
of the Dr. Reddy’s Group, Dr. Reddy’s Research Foundation and Dr. Reddy’s
Foundation for Human and Social Development. He is the chairman of the Academy
of Human Resources Development and chairman of the Research and Development
Committee of the Federation of Indian Chamber of Commerce and Industry (FICCI).
He is a member of both the Board of Trade and the Task Force on pharmaceuticals
and knowledge-based industries, which was instituted by the Prime Minister. He
has been recently honoured with the Padmashree by the Government of India, for
his distinguished service in the field of trade and commerce.
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on 03.08.2007
Category
|
No. of shares
|
% of shareholding
|
promoters’ holdings
|
|
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|
Individuals |
4489584 |
2.67 |
|
Companies |
37798290 |
22.49 |
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Sub Total |
42287874 |
25.16 |
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Indian Financial
Institutions |
20853198 |
1241 |
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Banks |
848.089 |
0.50 |
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Mutual funds |
7031737 |
4.18 |
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|
28733024 |
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Foreign
Holdings |
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Foreign
Institutional Investors |
43852039 |
26.09 |
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NRIs |
3434003 |
2.04 |
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American Depository Receipts / Foreign
National |
25054870 |
14.90 |
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Sub Total |
72340912 |
4304 |
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Indian Public and Corporate |
24735632 |
14.72 |
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Grand Total |
168097442 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturers and
Sellers of Bulk Drugs, Formulations and Diagnostic Reagents and Kits. |
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Products : |
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Exports : |
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Products : |
API’s Finished Formulations |
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Countries : |
All Countries |
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Imports : |
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Products : |
Chemicals, Packaging Materials, Packaging Machinery |
PRODUCTION STATUS
|
Class
of Goods |
Unit |
Actual Production |
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Formulations |
Million Units |
2816 |
|
Active Pharmaceutical ingredients and intermediates [API] |
Tones |
3101 |
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Generics |
Million Units |
1939.48 |
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Biotechnology – on single shift basis |
Grams |
73 |
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Custom Pharmaceutical Services |
Kilograms |
219200 |
GENERAL
INFORMATION
|
No. of
Employees : |
1449 |
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Bankers : |
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Banking Relations : |
Good |
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Auditors : |
Bharat S. Raut
and Company Chartered Accountants
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Associates : |
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Subsidiaries : |
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Membership : |
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CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
100000000 |
Equity Shares |
Rs. 5/- each |
Rs. 500.000 millions |
Issued, Subscribed
& Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
839600000 |
Equity Shares |
Rs.10/- each |
Rs.839.600 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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|
|
|
|
1] Share Capital |
839.600 |
388.473 |
382.600 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
42894.000 |
22237.944 |
20358.200 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
43733.600 |
22626.417 |
20740.800 |
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LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
19.200 |
1451.285 |
32.700 |
|
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2] Unsecured Loans |
3279.800 |
7787.410 |
2699.700 |
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TOTAL BORROWING |
3299.000 |
9238.695 |
2732.400 |
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DEFERRED TAX LIABILITIES |
0..000 |
530.847 |
0.000 |
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TOTAL |
47032.600 |
32390.959 |
23473.200 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
6820.400 |
5618.151 |
5625.400 |
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Capital work-in-progress |
2806.100 |
1129.160 |
601.300 |
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INVESTMENT |
8302.100 |
8217.937 |
3584.600 |
|
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
4875.800
|
4430.968 |
3038.100 |
|
|
Sundry Debtors |
10557.000
|
5812.160 |
4176.400 |
|
|
Cash & Bank Balances |
14567.100
|
6509.429 |
8917.200 |
|
|
Other Current Assets |
0.000
|
0.000 |
0.000 |
|
|
Loans & Advances |
10285.600
|
6776.456 |
2679.000 |
|
Total
Current Assets |
40285.500
|
23529.013
|
18810.700 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
7319.500
|
5532.648 |
4515.000 |
|
|
Provisions |
3862.000
|
570.654 |
633.800 |
|
Total
Current Liabilities |
11181.500
|
6103.302 |
5148.800 |
|
|
Net Current Assets |
29104.000
|
17425.711 |
13661.900 |
|
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|
|
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|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
47032.600 |
32390.959 |
23473.200 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
|
31.03.2005 |
|
|
Sales Turnover |
40472.200 |
21365.711 |
17299.700 |
|
|
Other Income |
1150.300 |
|
|
|
|
Total Income |
41622.500 |
|
|
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
13658.500 |
2637.646 |
443.600 |
|
|
Provision for Taxation |
1889.900 |
526.407 |
(211.000) |
|
|
Profit/(Loss) After Tax |
11768.600 |
2111.239 |
654.600 |
|
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Earnings in Foreign Currency : |
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Export Earnings |
|
|
|
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Commission Earnings |
NA |
12100.041 |
9197.355 |
|
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Other Earnings |
|
|
|
|
Total Earnings |
|
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|
|
|
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|
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Imports : |
|
|
|
|
|
|
Raw Materials |
|
|
|
|
|
Stores & Spares |
NA |
2744.535 |
2282.872 |
|
|
Capital Goods |
|
|
|
|
|
Others |
|
|
|
|
Total Imports |
|
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|
|
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Expenditures : |
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|
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|
Cost of Goods Sold |
|
|
|
|
|
Manufacturing Expenses |
2971.900 |
1720.500 |
1422.200 |
|
|
Administrative Expenses and Selling Expenses |
7532.400 |
5487.700 |
5052.000 |
|
|
Raw Material Consumed |
1040.18 |
7166.700 |
5039.600 |
|
|
Excise Duty |
896.600 |
987.200 |
768.000 |
|
|
Employee Cost |
2616.100 |
1995.400 |
1771.300 |
|
|
Interest and Financial Charges |
519.600 |
246.200 |
127.400 |
|
|
Power & Fuel |
578.300 |
482.300 |
432.000 |
|
|
Depreciation & Amortization |
1335.000 |
1113.300 |
924.600 |
|
Total Expenditure |
17490.080 |
19199.300 |
15537.100 |
|
QUARTERLY RESULTS
|
Year |
30.09.2007 |
30.06.2007 |
|
Type
|
2nd
Quarter |
1st
Quarter |
|
Sales Turnover |
8655.600 |
7398.800 |
|
Other Income |
518.500 |
598.500 |
|
Total Income |
9174.100 |
7997.300 |
|
Total Expenditure |
7308.100 |
5863.600 |
|
Operating Profit |
1866.000 |
2133.700 |
|
Interest |
18.200 |
58.200 |
|
Gross Profit |
1847.800 |
2075.500 |
|
Depreciation |
386.900 |
349.600 |
|
Tax |
97.000 |
127.400 |
|
Reported PAT |
1250.000 |
1456.900 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
0.19 |
0.28 |
0.08 |
|
Long Term Debt Equity Ratio |
0.02 |
0.04 |
0.01 |
|
Current Ratio |
2.20 |
1.85 |
2.64 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
3.45 |
2.05 |
1.79 |
|
Inventory |
8.70 |
5.64 |
5.79 |
|
Debtors |
4.94 |
4.21 |
3.78 |
|
Interest Cover Ratio |
27.29 |
10.39 |
4.48 |
|
Operating Profit Margin (%) |
38.33 |
17.44 |
9.19 |
|
Profit Before Interest and Tax Margin (%) |
35.03 |
12.15 |
3.51 |
|
Cash Profit Margin (%) |
32.38 |
14.12 |
9.71 |
|
Adjusted Net Profit Margin (%) |
29.08 |
8.83 |
4.02 |
|
Return on Capital Employed (%) |
35.94 |
9.24 |
2.56 |
|
Return on Net Worth (%) |
35.47 |
8.57 |
3.18 |
LOCAL AGENCY
FURTHER INFORMATION
Company Details:
Subject established in 1984, is a leading Indian
pharmaceutical company with vertically integrated operations. The company
develops, manufactures and markets a wide range of pharmaceutical products in
India and overseas. Dr. Reddy's produces finished dosage forms, active
pharmaceutical ingredients, diagnostic kits, critical care and biotechnology
products. The company has over 190 finished dosage brands and 60 active
pharmaceutical ingredients currently in production.
Subject actively pursues a basic research programme under the aegis of Dr.
Reddy's Research Foundation (DRF). DRF focuses on cancer, diabetes, bacterial
infections and pain management. The company has several pharmaceutical products
in development, three of which are in clinical trials and two have completed
pre-clinical testing.
The merger with Cheminor Drugs (the swap ratio at nine shares of Dr. Reddy's
Laboratories for 25 shares of Cheminor), has made Subject the third largest
pharmaceutical company in India with participation in every element of the
value chain. Subjects a major player in the domestic finished dosages market
and many of its brands are leaders.The company has a formidable presence in the
highly regulated markets of the US, the EU and Japan and it exports its
products to 60 countries.
The company has successfully entered the US with both Active Pharmaceuticals
Ingredients(API) and Generic Formulations.The company has two US-FDA approved
plants. It has been exporting its products to the UK, Switzerland, Germany,
Spain, Italy and the Netherlands. It also started exporting its formulations in
a big way to Russia and has set up an office there. SUBJECT has signed a joint
venture agreement with the Khetan group, Nepal, for setting up a joint venture
for the manufacture and marketing of finished formulations in Nepal and other
neighbouring countries. It also signed a marketing and distribution agreement
with Organics, Israel, for a wide range of sophisticated diagnostic kits. The
products are recognized by WHO and other leading organisations in the
healthcare industry.
The company issued 4301076 GDSs representing 4301076 equity shares of the
Company, par value Rs.10 ('Shares'). The GDSs are listed on the Luxembourg
Stock Exchange and each GDS represents one Share. As of May 4, 2001, there were
1789285 GDSs outstanding representing 1789285 Shares.
The company entered the global generic market with exports of
Ranitidine-75 mg and Fluoxetine to North America. The company has entered into
an exclusive co-marketing and development agreement with Par Pharmaceuticals
Inc. covering fourteen generic pharmaceuticals products. This will strengthen
the company's position in the US generic market and it will get a substantial
cost advantage on account of its vertical integration capabilities.
In April 2001, as a first step towards taking its molecules through clinical
development on its own, Dr. Reddy's Laboratories has selected Simbec Research
Limited, a well-known UK-based Clinical Research Organization (CRO), for
conducting clinical trials of DRF 4832. DRF 4832 is a PPAR agonist for
treatment of cardiovascular complications.
In May 2001, Novartis Pharma AG and Dr. Reddy's Laboratories announced that
they have entered a licensing agreement for a novel anti-diabetes agent. Under
terms of the agreement Dr. Reddy's will grant Novartis worldwide exclusive
rights to development and commercialisation of their insulin sensitiser DRF
4158 in type 2 diabetes, in return for up to USD 55 million in upfront and
milestone payments for specific clinical and regulatory endpoints, as wellas
royalties. Dr. Reddy's will have co-promotion rights for DRF 4158 in India. The
agreement has received US regulatory clearance and has become effective from
July 30, 2001. This event has triggered an upfront payment of 5 million US
dollars from Novartis. Dr. Reddy's has received this payment.
In May 2002, SUBJECT has completed phase I clinical trials on its anti-cancer
compound DRF-1042. This is company’s first new chemical entity (NCE) in the
cancer area. With the approval of Shareholders the Face value of the company
shares has been reduced to Rs.5 per share . The Scheme of merger with erstwhile
American Remedies Limited was fully
completed and shares were exchanged for one share of the company for every 12 shares
in erstwhile ARL.
In Apirl 2004 the company has launched Redotil, the first anti-hypersecretory
agent for the management of acute diarrhea and the first Dutas for the
treatment of enlarged prostate,which is a oral treatment, in India.
During September 2005 the company has planned about the formation of
India's first integrated drug development company Perlecan Pharma Private
Limited with the equity capital commitment of USD 52.5 Million from India's
leading Captial Ventures.
In the year 2005 the company has entered into a partnership with ICICI
Venture Funds Management Company for commericalisation of the company's US
ANDAs in the generics business. The company has acquired Trigenesis
Therapeutics, Inc., a US based R and D Company which is privately owned
dermatology in April 2004. The company has also entered into a multi-product
agreement with Pharmascience Group for the development and marketing of generic
products in Canada. Also the company has alliance with a biotechnology company
for the development of a bio-generics portfolio.
The company has increased its installed capacity of Biotechnology by 30 Grams
and with this the total installed capacity of Biotechnology has increased to
370 Grams.
In 2006, The company involved de-bottlenecking of existing capacities and
adding new lines, especially to meet growing international demand for generics
and customs pharmaceuticals services. During the year company has made two
major acquisitions. The first was the purchase of Roche's API Business, its
order-book and its manufacturing plant at Cuernavaca in Mexico. The another
acquisition was that a betapharm, Germany.
Directors Report:
SHARE
CAPITAL
The paid up Share Capital of the Company increased
by Rs. 456.088 millions in the financial year ended March 31, 2007
MANAGEMENT
DISCUSSION AND ANALYSIS
2006-07 has been a memorable year for Dr. Reddy's. The predominant story
has been its excellent financial performance. It grew the topline more than two
and a half times to achieve a consolidated revenue of Rs. 65,095 million - thus
crossing the historic U.S.$. 1.5 billion milestone1. Profit after tax (or net
income in US GAAP parlance) increased more than four times to Rs. 9327 million
(U.S.$. 216 million) in 2006-07. This performance has made Dr. Reddy's the
largest and most profitable pharmaceutical company of India for 2006-07. The
Company is now well entrenched to secure a permanent place as one of the top 10
generic players of the world.
This performance has been due to the interplay of several factors - all of
which have been due to the Company's successes in leveraging the different
building blocks of growth.
There are many such building blocks: creating a lean manufacturing
organization across all its businesses; strengthening Dr. Reddy's position in
existing markets, in developing new geographies; building infrastructure to
drive greater production; creating a significantly faster and more focused
product development process; creating wider technical capabilities; leveraging
the new acquisitions; and optimizing efforts across the entire Company through
proactive and seamless information technology networks.
While Dr. Reddy's core businesses recorded consistent year-on-year growth - and
the German and Mexican acquisitions widened the Company's market presence and
customer portfolio - the key highlight of 2006-07 has been the success of new
launches in U.S. Generics market. Displaying innovative deal making
capabilities, the Company's business development team ensured that North
American Generics contributed to approximately a third of Dr. Reddy's
consolidated revenues. This was significantly driven by new launches in the
U.S. Here are the details:
In June 2006, the Company launched simvastatin and finasteride, the generic
versions of Zocor(R) and Proscar(R) respectively, as authorized generic
products of Merck. This authorized generic transaction was the first of its
kind - not only by an Indian company in the U.S. market, but also for a large
U.S.$. 4 billion innovator drug (Zocor(R)). Though Dr. Reddy's did not have the
180-day exclusivity for these products, it was able to secure a mutually
rewarding partnership with Merck to sell the generic versions during the
exclusivity period. These products alone contributed to Rs. 15813 million, or
24 per cent of the Company's total revenues. Even after the end of 180-day
period in December 2006 and the subsequent entry of multiple players, Dr.
Reddy's maintained a market share of 24 per cent for simvastatin, and 18 per
cent for finasteride.
- In December
2006, Dr. Reddy's launched in the U.S., the generic version of Zofran(R),
under the 180-day exclusivity provisions of the Hatch Waxman Act. Earlier
in the year, the Company had signed a settlement for Para- IV litigation
for this product with its innovator, GSK, which had increased the
certainty of a very rewarding 180-day opportunity for this product. By the
end of the financial year, ondansetron contributed Rs. 2890 million in
revenues. The timely launch of this product despite extremely stretched
deadlines demonstrates how well several teams within Dr. Reddy's
coordinated between different locations and functions and interfaced with
the regulators to deliver an extraordinary breakthrough opportunity. As on
March 31, 2007, the Company's market share for this product was 62 per
cent. In fact, after the ondansetron in current year and fluoxetine in
2001, Dr. Reddy's along with Ranbaxy are the only Indian companies to get
two 180-day exclusivities in the U.S. Generics market.
Among other launches, the key one was fexofenadine, the generic version of
Allegra(R), which was a launch at risk'. The Company's market share at the end
of the year was 11 per cent, and the product contributed significantly to the
revenues and profitability. Dr. Reddy's has good reasons to believe that the
U.S. Courts will ultimately decide in favor of the generic companies that have
launched at risk'.
- While the
financial results speak for themselves, the Company's underlying business
drivers have also been strengthened. Here are some facts:
Dr. Reddy's cumulative Drug Master File (DMF) and Abbreviated New Drug
Application (ANDA) filings in the U.S. crossed 100 during this year. As on
March 31, 2007, there are 69 ANDAs pending for approval at the U.S. Food and
Drug Authority (FDA), addressing an innovator sales of U.S.$. 57 billion (IMS
Dec. 06).
The Formulations business continues to achieve high double-digit growth across
all key geographies. Within India, AC Nelsen in its recent survey has rated Dr.
Reddy's as the fourth best in terms of image and perception across all
specialties. In fact, at 16 per cent, Dr. Reddy's is the second fastest growing
company among the Top-10 players in India. International markets of Formulations
showed even faster revenue growth of 34 per cent - driven primarily by growth
in Russia, CIS countries, Romania and Venezuela.
In the Active Pharmaceutical Ingredients (API or Bulk Drugs') business,
customer relationships were deepened and the product mix for the year was
targeted in favor of high margin regulated markets. This helped to offset the
pricing volatility in the less regulated markets. This helped revenues from API
to grow by 44 per cent in 2006-07.
The acquisitions in Germany and Mexico, which were made in the latter part of
2005-06, have been integrated into Dr. Reddy's fold, and are operating as
full-fledged group companies. These two acquisitions contributed revenues of
Rs. 13,401 million, or 21 per cent of overall revenues.
During the year, the Company invested Rs. 4,477 million on manufacturing,
RandD facilities and other capital expenditure - the highest level of
investment in a single financial year up to date These investments will create
the capacity to support Dr. Reddy's strategic growth agenda. The formulations
manufacturing facility at Baddi (Himachal Pradesh) is now fully operational,
and is expected to generate significant tax savings for the future.
To support high growth and fund new organic and inorganic initiatives, the
Company issued additional American Depositary Shares (ADSs) under the
accelerated filing procedure mandated by the U.S. Securities Exchange
Commission (SEC), which generated net funds of Rs. 10,030 million. The
liquidity position is healthy, as most of the higher cost, shorter term debt
has been retired out of the operational cash surplus generated during the
year.
Detailed discussion of
business-wise performance occur in later sections.
TRENDS
IN GLOBAL MARKETS
Note: Global market share numbers referred
to in this and subsequent sections are based on latest available reports from
market research agencies such as IMS Health Inc.
In calendar year 2006, the global pharmaceutical market grew 7 per cent,
at constant exchange rates, to U.S.$. 643 billion. There was a rebound in
growth to 8.3 per cent in the U.S., mainly on account of an increase in
prescribing volume due to Medicare Part D and new drugs in oncology.
Pharmaceutical growth continued to be driven
by increased longevity, strong economic performances throughout OECD countries
and emerging markets, and innovative new products. During 2006, 31 new
molecular entities were launched in key markets. Overall, products launched
between 2001 and 2005 contributed revenue of U.S.$. 13.5 billion in 2006.
There has been a visible shift in growth from mature to emerging markets,
and from primary care classes to biotech and specialist-driven therapies. As an
example, in 2006, specialist-driven products contributed 62 per cent of the world
market's growth, compared to 35 per cent in 2000. Generics represented more
than half of the volume of pharmaceutical products sold in seven key world
markets - the U.S., Canada, France, Germany, Italy, Spain, and the UK. This
trend reflects the changing balance between new and old products, and the
growing genericization' of many primary care categories.
GLOBAL REGIONAL PERFORMANCE
In 2006, North America, which accounts
for 45 per cent of global pharmaceutical sales, grew by 8.3 per cent to U.S.$.
290 billion. This strong growth - up from 5.4 per cent in the previous year -
was due to Medicare Part D benefit and resulting increase in prescribing
volume, as well as solid 7.6 per cent growth in Canada.
The five major European markets (France, Germany, Italy, Spain and the UK)
experienced 4.4 per cent growth to U.S.$. 123 billion. Sales in Latin America
grew 12.7 per cent to U.S.$. 33.6 billion, while Asia Pacific (other than
Japan) and Africa grew at 10.5 per cent to U.S.$. 66 billion.
Japan experienced a 0.4 per cent decline from a year earlier, to U.S.$. 64
billion - the result of the government's biennial price cuts.
Pharmaceutical sales in China grew 12.3 per cent to U.S.$. 13.4 billion in
2006, compared with 20.5 per cent growth in the previous year. This slowdown
was due to the government's introduction of a campaign to limit physician
promotion of pharmaceuticals.
India was one of the fastest growing markets
in 2006, with pharmaceutical sales increasing 17.5 per cent to over U.S.$. 7
billion, which transformed it from a developing' market to an emerging one.
Several factors, including the acceptance of intellectual property rights, a
robust economy and the country's burgeoning healthcare needs have contributed
to accelerated growth in India.
Overall, 27 per cent of total market growth is now coming from countries which
have per capita Gross National Income of less than U.S.$. 20,000. In 2001,
these lower-income countries contributed to just 13 per cent of growth.
Despite continued expansion of global pharmaceutical markets, underlying
dynamics continue to alter the landscape. In 2006, products with sales in
excess of U.S.$. 18 billion lost their patent protection in seven key markets -
including the U.S., which accounted for over U.S.$. 14 billion of such sales.
With lower-cost therapies replacing branded products in classes such as lipid
regulators, antidepressants, platelet aggregation inhibitors, anti-emetics and
respiratory agents, generics will assume a more central role, as payers seek to
restrict the growth of healthcare expenditures. Another factor influencing the
market is the increasingly active role of patients and insurance funds, as they
take charge of their health and demand greater access to therapies that will
improve or prolong their lives.
TRENDS IN INDIA
Note: Information in this section is
based on the Indian Pharmaceutical Overview Report, published by ORG IMS
Research Private Limited for the year ended December 2006.
Compared to single-digit growth in the global market, India showed an
outstanding growth of 17.5 per cent for the year ended December 2006. All the
growth influencers - new introductions and price/volume growth of the older
products - showed positive trends.
At the level of corporations, there were some changes in the ranking of
companies in the Indian market. Ranbaxy (ranked number 3 in 2005) displaced
Cipla for the number 2 slot. Dr. Reddy's once again entered the Top-10.
Despite its high base, acute segment bounced back with high growth rates, while
the chronic segment continued with its double-digit growth thanks to new
introductions, price increase and greater volumes of existing products. The
acute segment grew by 18 per cent during 2006, versus 6 per cent and 8 per cent
in 2004 and 2005, respectively; the chronic segment grew by 17 per cent,
compared to 11 per cent growth for the previous two years.
During 2006, rural markets increased their share in total Indian sales to
21 per cent - up from 16 per cent in 2004, and 18 per cent in 2005. As rural
incomes continue to increase, especially in the north, west and south of India,
this segment is expected to grow over time.
DR. REDDY'S MARKET PERFORMANCE
REVENUES
The
Company's consolidated revenues grew by 168 per cent to Rs. 65,095 million in
2006-07, or U.S.$. 1.5 billion. Revenue growth was driven by authorized generic
products, contribution from the acquisitions in Germany and Mexico, as well as
growth across all businesses and geographies, including API, Formulations and
Custom Pharmaceuticals Services.
Excluding authorized generics and acquisitions, revenues grew by 58 per
cent, from Rs. 22,757 million in 2005-06 to Rs. 35,881 million in
2006-07.
The Company witnessed major shifts in its revenue composition.
International operations accounted for 86 per cent of total revenues in
2006-07, compared to 66 per cent a year earlier. North America (U.S. and
Canada) contributed to 44 per cent of total revenues in 2006-07, versus 16 per
cent in 2005-06. Europe (excluding Russia and the Commonwealth of Independent
States (CIS) accounted for 23 per cent of total revenue in 2006-07, as against
18 per cent in 2005-06. Despite high growth, Russia and other countries in the
CIS contributed to 8 per cent of the total in 2006-07, compared to 15 per cent
in 2005-06.
India contributed to 14 per cent of total revenues in 2006-07, versus 34 in
2005-06.
GENERICS
Generics revenues increased from Rs. 4,056 million in 2005-06 to Rs. 33,224
million in 2006-07. This was primarily due to contribution from authorized
generic products, revenues from new product launches in North America, and full
year consolidation of revenues from the betapharm acquisition in Germany.
North American revenue increased from Rs. 1,631 million in 2005-06 to Rs.
23,617 million in 2006-07, thanks to authorized generics and new product
launches. Simvastatin and finastride, launched as authorized generic versions
of Zocor(R) and Proscar(R) respectively (under the agreement with Merck),
contributed Rs. 15,813 million. After the end of 180-day exclusivity period,
the Company launched its own generic version of simvastatin. In 2006-07,
company acquired an average share of 24 per cent of the simvastatin
market.
New products, other than authorized generics, launched during the year
contributed Rs. 5,657 million to revenue. The most prominent launches were
ondansetron and fexofenadine. Ondansetron, the generic version of Zofran(R),
was launched in the last week of December 2006 with 180-day marketing
exclusivity, and contributed Rs. 2,890 million. Dr. Reddy's has already
acquired 62 per cent market share, despite the presence of an authorised
generics version launched by Sandoz. Fexofenadine, the generic version of
Allegra(R), contributed Rs. 2429 million. The rest of the Company's North
American generics portfolio witnessed significant volume growth which more than
offset pricing pressure.
Revenues from Europe grew from Rs. 2422 million in 2005-06 to Rs. 9603
million in 2006-07 - largely on account of the full year's revenue from
betapharm in Germany, compared to 28 days during 2005-06. Excluding betapharm
and new operations in Spain, European revenues decreased by 7 per cent to Rs.
1,599 million in 2006-07, on account of severe pricing pressure. Over the last
several months, the German Government has been driving significant reforms to
reduce the healthcare costs. In early 2006, the Economic Optimization of
Pharmaceutical Care Act (AVWG) was introduced which reduced reference prices, banned
free goods and introduced the concept of co-payment waiver. The industry
reacted by reducing prices in excess of those mandated by the new reference
prices and the insurance funds tested the concept of co-payment waiver for 79
substances. Subsequently in October 2006, the insurance funds further leveraged
the power of co-payment waiver to include additional substances and the
industry followed with a reduction in prices.
As of April 1, 2007, an additional law to regulate the German health care
system took effect. This law due to its comprehensive regulations is likely to
lead to significant structural changes of the German health care system and the
market structures which depend on it. The new law empowers insurance companies
to enter into contracts with suppliers of generics. It also requires the
doctors to prescribe and pharmacists to dispense drugs covered by contracts
with insurance companies.
CUSTOM PHARMACEUTICAL SERVICES
(CPS)
Revenue in this segment increased from Rs. 1,327 million in 2005-06
to Rs. 6,600 million in 2006-07. Current year sales include the full year's
revenues of the Mexican acquisition amounting to Rs. 5,397 million - versus one
quarter's revenue of Rs. 805 million last year. On an annualized basis, growth
of revenues in Mexico works out to 67 per cent. The Mexican acquisition has
proved to be extremely value creating for the Company, and has helped achieve
the CPS business a critical mass in terms of product portfolio. Excluding the
revenues from acquisition in Mexico, revenues increased by 134 per cent to Rs.
1,203 million
OUTLOOK
Compared
to the superlative financial performance in 2006-07, the year 2007-08 poses
challenges. In 2006-07, Dr. Reddy's enjoyed benefits of multiple upsides in the
form of exclusivities and semiexclusivities in its Generics and API businesses.
Similar upsides will be limited in 2007-08. However, the base business will
continue to show strong growth in line with the capabilities and resources that
have been built up over the years.
The Company's core businesses of API and Formulations are expected to be
consistent in their revenue growth and consequent margin contribution. North
American Generics is also expected to strengthen its position as a standalone
profitable business with a number of new launches planned in 2007-08. Generics
business in Europe also will see consolidation and stabilization after the
price cuts of 2006-07. Moreover, the Company's initiative to shift some of the
betapharm's supplies to India, as a result of the amended Salutas agreement,
should lead to an unlocking of some of the synergies that were expected at the
time of making the acquisition. The CPS business, aided by very successful
operations in Mexico, is expected to grow further on the back of excellent
relationships and franchise created with customers.
In line with its stated philosophy and strategy, Dr. Reddy's will
continue to pursue both the organic as well as inorganic options to achieve
faster growth. It expects to create value for the shareholders with focused
efforts in business development, mutually rewarding partnerships and pipeline
enhancement. Further, the Company has committed significant investments in the
infrastructure and facilities for almost all its businesses to support
potential revenue scale-ups in the near future. In addition, there have been
major initiatives at improving productivity, systems and practices as a part of
execution excellence throughout the entire operations.
All the building blocks for growth are in place. Therefore, the outlook
for 2007-08 is encouraging. And the Company looks forward to continuing a
healthy financial performance in the future.
PRESS RELEASE:
Dr. Reddy's
launches Glimy MP 1 and Glimy MP2.
Triple drug
combination ideal to address the triple defects in diabetes
Hyderabad, India,
July 10, 2007: Glimy MPTM (Glimepiride+ Metformin+ Pioglitazone) has been launched
nationwide in July 07 marking the entry of Dr. Reddy’s in the triple drug
combination oral hypoglycemic agents market. Glimy MPTM is an extension of the
existing products of Dr.Reddy’s used in the management of Type 2 diabetes. It
is a one step approach to intensive glycemic control.
Glimy MPTM is
available in dosages of 1mg (Glimy MP1) and 2mg (Glimy MP2), in sizes of 10tabs
/ strip and 10strips/pack. The triple drug combination offers the range of
options available for the doctor to address their needs in different situations
in the management of type 2 diabetes.
Notes to the
editor:
- The triple drug combination oral hypoglycemic agents market is
about Rs 62 crore in size and has grown by 176% in the last one year (as
per ORG MAT April’07)
- Glimy MPTM is a new brand extension. Existing products of
Dr.Reddy’s are GLIMY (Glimepiride 1,2,3,4 mg tabs), GLIMY-M (Glimepiride1
and 2 mg+ Metformin ER 500mg) and GLIMY-P (Glimepiride + Pioglitazone)
- Dr.Reddy’s is the first company to emphasize on HbA1C(Glycosylated
Hemoglobin level) target as < 6.5%
- Glimy MPTM helps patients achieve the level of HbA1C < 6.5%
- Other brands of Dr.Reddy’s in this segment are ReclideTM and
ReclimetTM
Brief mode of action of Glimy MPTM - Diabetes is a metabolic disease with three anomalies i.e. reduced
insulin secretion, decreased insulin sensitivity and increased hepatic
glucose production.
- Glimepiride works by increasing the insulin secretion (act on
Pancreas), Metformin acts by decreasing the hepatic glucose output (act on
Liver), and Pioglitazone acts by increasing the insulin sensitivity (act
on peripheral tissues).
- Thus the triple combination addresses all the three anomalies in
diabetes and thereby helps patients to achieve the target goal of HbA1C
<6.5.
Disclaimer:
This press release
includes forward-looking statements, as defined in the U.S. Private Securities
Litigation Reform Act of 1995. They have based these forward-looking statements
on their current expectations and projections about future events. Such
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results to differ materially. Such factors include, but
are not limited to, changes in local and global economic conditions, their
ability to successfully implement their strategy, the market acceptance of and
demand for their products, their growth and expansion, technological change and
their exposure to market risks. By their nature, these expectations and
projections are only estimates and could be materially different from actual
results in the future.
Established in
1984, Dr. Reddy's Laboratories (NYSE: RDY) is an emerging global pharmaceutical
company with proven research capabilities. The Company is vertically integrated
with a presence across the pharmaceutical value chain. It produces finished
dosage forms, active pharmaceutical ingredients and biotechnology products and
markets them globally, with focus on India, US, Europe and Russia. The Company
conducts research in the areas of diabetes, cardiovascular, anti-infectives,
inflammation and cancer.
Rheoscience and Dr. Reddy’s commence the first Phase III trial of Balaglitazone
(DRF 2593)
- Balaglitazone is a novel TZD candidate for the treatment of
diabetes mellitus
- First Global Phase III clinical trials of a Dr. Reddy’s new
chemical entity
Copenhagen, Denmark and Hyderabad, India, August 1, 2007:
Rheoscience A/S and Dr. Reddy’s
Laboratories (NYSE:RDY) today announced that the first patient has been dosed
in a Phase III study with Balaglitazone (DRF2593-307), which is an insulin
sensitizer that acts as a partial PPAR (peroxisome proliferator-activated
receptor) gamma agonist. The study is the first in a series of planned Phase
III trials which will investigate the safety and efficacy of Balaglitazone, as
an oral anti-diabetic drug.
Balaglitazone
is a second generation of PPAR gamma agonist with only partial agonistic
properties, which in clinical phase II studies have shown to have glucose
lowering capabilities and to be body-weight neutral. In preclinical
experiments, balaglitazone has been shown to cause less fluid retention than
full PPAR gamma agonists.
In
the trial, Balaglitazone will be tested in a 6 month double-blinded,
randomised, placebo-controlled multicenter trial in which type 2 diabetes
patients will be given daily doses of either 10 or 20 mg of Balaglitazone
versus the active comparator Actos® (45 mg/day) as an add on to stable insulin
treatment. The primary clinical end-point of the study is a glucose lowering
effect assessed as a change in haemoglobin A1c (HbA1c) levels – the preferred
standard measure of a patient’s blood glucose control over time. The study is
designed to show non-inferiority to Actos®. As a secondary end point, major
emphasis will be focused on assessing the safety profile, including its impact
on weight gain and oedema.
A
complete Phase III programme has been designed in which the glucose lowering
effects of Balaglitazone will be tested either alone, or in combination with a
number of other oral agents such as metformin and sulfonylurea.
Balaglitazone
is being developed under a co-development agreement between India based Dr.
Reddy’s and Rheoscience in Denmark. Rheoscience will retain the marketing
rights to European Union and China and Dr. Reddy’s will retain the marketing
rights in the territories of United States and rest of the world. Rheoscience
shall obtain all necessary regulatory approvals on behalf of Dr. Reddy's in the
United States.
About Rheoscience
Rheoscience
is a Danish biopharmaceutical company focused on the discovery and development
of novel pharmaceutical products for the treatment of metabolic diseases such
as diabetes and obesity. Rheoscience has unparalleled experience in developing
drugs for metabolic disorders and draws on this to advance its own pipeline of
innovative compounds and to underpin its successful, profitable contract
research business.
Rheoscience’s
lead product is the oral anti-diabetic drug, balaglitazone, which is entering
Phase III clinical trials for the treatment of type 2 diabetes, a disease that
affects approximately 6% of the global adult population aged 20-79 years.
Balaglitazone is being co-developed with Dr Reddy’s.
Rheoscience’s
pipeline also includes an advanced pre-clinical program around a mimic of an
intestinal hormone that makes people feel ‘full’ after eating and is intended
for the treatment of obesity.
Dr.
Reddy’s Laboratories was established in 1984 in Hyderabad, India, and is a
global pharmaceutical company with proven research capabilities. Dr. Reddy’s
conducts research in the areas of diabetes, cardiovascular, anti-infectives,
inflammation and cancer. The Indian based company produces finished dosage
forms, active pharmaceutical ingredients and biotechnology products which are
marketed globally, with focus on India, US, Europe and Russia.
Dr. Reddy's Contact Information:
Investors and Financial Analysts:
Nikhil
Shah at nikhilshah@drreddys.com
or on +91-40-23731946 ext. 308
Media:
Mythili Mamidanna at mythilim@drreddys.com or on +91-40-66511620
Rheoscience Contact Information:
Philip Just Larsen
Chief Executive Officer
Rheoscience A/S
Contact: +45 44501 960
Notes to the editor:
- Balaglitazone is an insulin sensitizer that acts as a partial PPAR
(peroxisome proliferator-activated receptor) gamma agonist being developed
for the treatment of type 2 diabetes. Balaglitazone is a novel compound
and belongs to the class of thiazolidinediones (TZD)
- Type 2 diabetes is the most common form of diabetes. In type 2
diabetes, either the body does not produce enough insulin or the cells
ignore the insulin.
- Type 2 diabetes is a disease that affects approximately 6% of the
global adult population aged 20-79 years. and represents an area with
significant unmet medical need. The World Health Organization (WHO)
estimates that more than 180 million people worldwide have diabetes. This
number is likely to more than double by 2030.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.33 |
|
UK Pound |
1 |
Rs.81.70 |
|
Euro |
1 |
Rs.57.67 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
10 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
81 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|