MIRA
INFORM REPORT
|
Report Date : |
06.09.2011 |
IDENTIFICATION DETAILS
|
Name : |
HIKAL LIMITED |
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Registered Office : |
717/718, Maker
Chambers V, 7th Floor, Nariman Point, Mumbai – 400 021, |
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Country : |
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Financials (as on) : |
31.03.2011 |
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Date of Incorporation : |
08.07.1988 |
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Com. Reg. No.: |
11–48028 |
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Capital Investment / Paid-up Capital : |
Rs.164.401
Millions |
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CIN No.: [Company
Identification No.] |
L24200MH1988PTC048028 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMH07537F /
BRDH00497A |
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PAN No.: [Permanent
Account No.] |
AAACH0383A |
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Legal Form : |
A Public Limited Liability Company. The Company’s Shares are Listed on
the Stock Exchanges. |
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Line of Business : |
The Company is engaged in the manufacturing of various chemical
intermediates, specialty chemicals, Active pharma ingredients and Contracts
Research activities. |
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No. of Employees : |
1023
Approximately |
RATING & COMMENTS
|
MIRA’s Rating : |
A (58) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
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Maximum Credit Limit : |
USD 17000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a
well-established and reputed company having fine track. Financial position of
the company appears to be sound. Trade
relations are fair. Payments are correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – April 1, 2010
|
Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
INFORMATION DECLINED BY
|
Name : |
Mr. Tushar Karmarkar |
|
Designation : |
Accounts Manager |
|
Date : |
22.08.2011 |
LOCATIONS
|
Registered
Office / Corporate Office : |
717/718, Maker
Chambers V, 7th Floor, Nariman Point, Mumbai – 400 021, |
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Tel. No.: |
91-22-22301801 |
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Fax No.: |
91-22-22833913 |
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E-Mail : |
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Website : |
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Head Office : |
6, |
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Tel. No.: |
91-22-22301801 |
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Fax No.: |
91-22-22833913 |
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Administrative
Office : |
603 A, Great
Eastern Chambers, Sector 11, CBD – Belapur, Navi Mumbai – 400 614, |
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Tel. No.: |
91-22-27574276 /
27574336 / 27574991 / 30973100 |
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Fax No.: |
91-22-27574277 |
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Email : |
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Plant
Locations : |
Taloja Mahad Panoli Tel
No. : 91-2646-302 100
R and D Centre, Pune ·
R and D Unit Bannerghatta, Karnataka ·
Pharma Unit - I Jigani, Karnataka ·
Pharma Unit - II Jigani, Karnataka ·
Dombivli, ·
MIDC, Taloja, District Raigad, ·
MIDC, Mahad, District Raigad, ·
GIDC, Panoli, District Bharuch, ·
KIADB, Jigani, ·
Bannerghatta, ·
MIDC, Dombivli, |
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Overseas
Office |
Located at ·
·
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DIRECTORS
As on 31.03.2011
|
Name : |
Mr. Baba N. Kalyani |
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Designation : |
Chairman and Non Executive Director |
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Name : |
Mr. Jai Hiremath |
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Designation : |
Vice Chairman and Managing Director |
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Name : |
Mr. Sameer J. Hiremath |
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Designation : |
Deputy Managing Director |
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Name : |
Mr. Prakash V. Mehta |
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Designation : |
Independent, Non-Executive Director |
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Name : |
Mr. Peter Pollak |
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Designation : |
Independent, Non-Executive Director |
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Name : |
Mr. Kannan K. Unni |
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Designation : |
Independent, Non-Executive Director |
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Name : |
Mr. Shivkumar M. Kheny |
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Designation : |
Independent, Non-Executive Director |
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Name : |
Mrs. Sugandha J. Hiremath |
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Designation : |
Non-Executive Director |
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Name : |
Mr. Amit Kalyani |
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Designation : |
Alternate Director to Peter Pollak |
KEY EXECUTIVES
|
Name : |
Mr. Sham. V. Wahalekar |
|
Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 30.06.2011
|
Category of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A) Shareholding of Promoter and Promoter Group |
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|
1602030 |
9.74 |
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9622707 |
58.53 |
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90000 |
0.55 |
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|
90000 |
0.55 |
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|
11314737 |
68.82 |
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Total shareholding of Promoter and Promoter Group (A) |
11314737 |
68.82 |
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(B) Public Shareholding |
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|
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|
1082569 |
6.58 |
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|
20100 |
0.12 |
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|
36205 |
0.22 |
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|
1138874 |
6.93 |
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|
|
|
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|
268957 |
1.64 |
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|
|
|
|
1311969 |
7.98 |
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|
172675 |
1.05 |
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|
2232888 |
13.58 |
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|
21586 |
0.13 |
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|
768622 |
4.68 |
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|
58370 |
0.36 |
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|
24310 |
0.15 |
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|
1360000 |
8.27 |
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|
3986489 |
24.25 |
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Total Public shareholding (B) |
5125363 |
31.18 |
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Total (A)+(B) |
16440100 |
100.00 |
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(C) Shares held by Custodians and against which Depository Receipts
have been issued |
- |
- |
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|
- |
- |
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- |
- |
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|
- |
- |
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Total (A)+(B)+(C) |
16440100 |
- |
(1)
Indian
Individuals
/ Hindu Undivided Family
TrustsBUSINESS DETAILS
|
Line of Business : |
The Company is engaged in the manufacturing of various chemical
intermediates, specialty chemicals, Active pharma ingredients and Contracts
Research activities. |
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Products : |
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PRODUCTION STATUS AS ON 31.03.2011
|
Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity ** |
Actual
Production |
|
Crop Protection
Products |
MT |
5560 |
5816 |
1668.24 |
|
Pharmaceutical
Products |
MT |
-- |
2500 |
-- |
** Installed capacity is as certified by the management and relied upon by the auditor, being a technical matter
** Computed on triple shift basis for 365 days production
GENERAL INFORMATION
|
No. of Employees : |
1023
Approximately |
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Bankers : |
·
Bank
of ·
Union
Bank of ·
Bank
of Novascotia ·
Export
Import Bank of ·
Axis
Bank of ·
Citibank
N. A. ·
IDBI
Bank Limited |
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Facilities : |
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
BSR and Company Chartered
Accountants |
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Subsidiaries :
|
·
Hikal International B.V. (“HIBV”) ·
Acoris Research Limited (“ARL”) |
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|
Enterprises over
which key management personnel and their relatives exercise significant
influence : |
·
Decent Electronics Private Limited (“DEPL”) ·
Marigold Investments Private Limited ·
Iris Investments Private Limited ·
Karad Engineering Consultancy Private limited
(“KECPL”) ·
Ekdant Investments Private limited (“EIPL”) ·
Rameshwar Investment Private Limited (“RIPL”) ·
Badrinath Investment Private Limited (“BIPL”) ·
Rushabh Capital Services Private Limited
(“RCSPL”) |
CAPITAL STRUCTURE
AS ON 31.03.2011
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
25000000 |
Equity Share |
Rs.10/- Each |
Rs.250.000
Millions |
|
5000000 |
Cumulative
Redeemable Preference shares |
Rs.100/- Each |
Rs.500.000
Millions |
|
|
Total |
|
Rs.750.000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
16440100 |
Equity Shares |
Rs.10/- Each |
Rs.164.401
Millions |
|
|
Total |
|
Rs.164.401
Millions |
Of the above:
·
150,000 equity shares of Rs.10/- each were allotted
as fully paid-up without payment being received in cash.
·
10,647,326 equity shares of Rs.10/- each are
allotted as fully paid-up bonus shares by capitalization of general reserve.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
164.400 |
164.401 |
164.401 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
4052.410 |
3826.090 |
3138.140 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
4216.810 |
3990.491 |
3302.541 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
4802.530 |
3965.550 |
3470.130 |
|
|
2] Unsecured Loans |
260.040 |
660.570 |
1347.770 |
|
|
TOTAL BORROWING |
5062.570 |
4626.120 |
4817.900 |
|
|
DEFERRED TAX LIABILITIES |
26.800 |
12.910 |
49.640 |
|
|
|
|
|
|
|
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TOTAL |
9306.180 |
8629.521 |
8170.081 |
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APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
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|
FIXED ASSETS [Net Block] |
5755.320 |
5623.730 |
4707.960 |
|
|
Capital work-in-progress |
556.080 |
353.470 |
1087.040 |
|
|
|
|
|
|
|
|
INVESTMENT |
181.670 |
181.671 |
181.671 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
1715.060
|
1828.340
|
1677.940 |
|
|
Sundry Debtors |
852.210
|
986.680
|
827.500 |
|
|
Cash & Bank Balances |
88.030
|
124.690
|
87.190 |
|
|
Other Current Assets |
0.000
|
0.000
|
0.000 |
|
|
Loans & Advances |
1392.920
|
1152.440
|
802.300 |
|
Total
Current Assets |
4048.220
|
4092.150
|
3394.930 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
857.230 |
963.230 |
1007.560 |
|
|
Other Current Liabilities |
183.780
|
299.280
|
161.250 |
|
|
Provisions |
194.100
|
360.890
|
38.200 |
|
Total
Current Liabilities |
1235.110
|
1623.400
|
1207.010 |
|
|
Net Current Assets |
2813.110
|
2468.750
|
2187.920 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
1.900 |
5.490 |
|
|
|
|
|
|
|
|
TOTAL |
9306.180 |
8629.521 |
8170.081 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
|
SALES |
|
|
|
|
|
|
|
Sales of products / income from services |
4935.110 |
5360.030 |
4780.050 |
|
|
|
Other Income |
59.580 |
17.870 |
14.450 |
|
|
|
TOTAL (A) |
4994.690 |
5377.900 |
4794.500 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Materials and Manufacturing Cost |
2785.400 |
2751.990 |
2729.010 |
|
|
|
Personal Cost |
526.950 |
443.800 |
380.710 |
|
|
|
Administrative and other operating
Expenses |
399.720 |
392.060 |
358.950 |
|
|
|
TOTAL (B) |
3712.070 |
3587.850 |
3468.670 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
1282.620 |
1790.050 |
1325.830 |
|
|
|
|
|
|
|
|
|
Less |
INTEREST AND
FINANCE CHARGES (D) |
412.380 |
348.300 |
248.440 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
870.240 |
1441.750 |
1077.390 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
381.880 |
329.590 |
209.740 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEM |
488.360 |
1112.160 |
867.650 |
|
|
Less |
Exchange gain/loss |
127.490 |
263.720 |
243.840 |
|
|
Less |
Reversal of cash flow hedge reserve |
(95.950) |
283.520 |
0.000 |
|
|
|
|
|
|
|
|
|
|
Exceptional Item Adjustments Pursuant to Scheme of Arrangement for Amalgamation of Hikal Pharmaceutical Limited into the Company |
|
|
|
|
|
Less: |
Dimunition in value of investment in subsidiary |
0.000 |
0.000 |
651.240 |
|
|
Add: |
Withdraw! from General reserve |
0.000 |
0.000 |
(651.240) |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
456.820 |
564.920 |
623.810 |
|
|
|
|
|
|
|
|
|
Less |
TAX (I) |
13.890 |
(36.730) |
34.900 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-I) (J) |
442.930 |
601.650 |
588.910 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
1391.220 |
1068.440 |
479.530 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
100.000 |
125.000 |
0.000 |
|
|
|
Interim Dividend on Equity Shares |
49.320 |
65.760 |
0.000 |
|
|
|
Proposed Dividend on Equity Shares |
49.320 |
65.760 |
0.000 |
|
|
|
Dividend Tax |
15.500 |
22.350 |
0.000 |
|
|
BALANCE CARRIED
TO THE B/S |
1620.010 |
1391.220 |
1068.440 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
3463.030 |
4527.810 |
4393.440 |
|
|
|
Management fees |
0.000 |
0.000 |
3.470 |
|
|
TOTAL EARNINGS |
3463.030 |
4527.810 |
4396.910 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
1171.560 |
952.860 |
1124.860 |
|
|
|
Capital Goods |
9.050 |
35.110 |
65.560 |
|
|
|
Stores & Spares |
3.490 |
3.580 |
7.080 |
|
|
TOTAL IMPORTS |
1184.100 |
991.550 |
1197.500 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) Basic Diluted |
26.94 26.37 |
36.60 35.22 |
37.33 35.87 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
|
30.06.2011 UnAudited |
|
Net Sales |
|
|
1428.000 |
|
Total Expenditure |
|
|
1079.800 |
|
PBIDT (Excl OI) |
|
|
348.200 |
|
Other Income |
|
|
13.800 |
|
Operating Profit |
|
|
362.000 |
|
Interest |
|
|
112.700 |
|
Exceptional Items |
|
|
0.000 |
|
PBDT |
|
|
249.300 |
|
Depreciation |
|
|
102.600 |
|
Profit Before Tax |
|
|
146.700 |
|
Tax |
|
|
1.700 |
|
Provisions and contingencies |
|
|
0.000 |
|
Profit After Tax |
|
|
145.000 |
|
Extraordinary Items |
|
|
0.000 |
|
Prior Period Expenses |
|
|
0.000 |
|
Other Adjustments |
|
|
0.000 |
|
Net Profit |
|
|
145.000 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
PAT / Total Income |
(%) |
8.87
|
11.19
|
12.28 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
9.26
|
10.54
|
13.05 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
4.66
|
5.81
|
7.70 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
10.83
|
0.14
|
0.19 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.49
|
1.57
|
1.82 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
3.28
|
2.52
|
2.81 |
LOCAL AGENCY FURTHER INFORMATION
BACKGROUND
Subject was incorporated
as a public limited Company on 08 July 1988 having its registered office at
717/718, Maker Chamber V, Nariman Point, Mumbai 21.
The Company is
engaged in the manufacturing of various chemical intermediates, specialty
chemicals, Active pharma ingredients and Contracts Research activities.
The Company is
operating in the crop protection and pharmaceuticals space.
OPERATIONS
Taloja Site :
In the last annual
report, they discussed the construction of a new multi-purpose plant. The plant
construction and
validation was
completed in this financial year and the second production campaign of an 'on
patent active ingredient' was successfully commercialized. The pilot plant
successfully completed small quantity manufacturing of six molecules intended
for commercial production at different Hikal sites. Of these molecules, one was
a pharma intermediate and the remaining five were for the crop protection
industry.
Mahad Site :
The Mahad site is
currently manufacturing intermediates and herbicides for the crop protection
industry. They have upgraded one of the manufacturing plants which will be used
to manufacture pharma intermediates for the domestic market. They also have
plans to utilize this plant for captive consumption for some of the active pharmaceutical
ingredients.
They have upgraded
the effluent treatment system on site and would be recycling a large part of
effluent waste is line with the environmental, health and safety policy.
Panoli Site :
They have introduced
two new pharma intermediate products at the Panoli site. These have been
validated at the plant scale and successfully passed the customer audits. They
expect to start commercialization of these products towards the end of this
fiscal year. Commercial trials of a new product from R and D were successfully
initialized at the plant level. To meet GMP requirements, the existing
manufacturing block and warehouse were refurbished. They have also submitted an
application to get approval from the Japanese regulatory authority (PMDA) for
this site. At the new multipurpose plant, several measures have been taken to
reduce the carbon footprint at the site in lieu of the increased production at
the site.
Under the internal Project Upgradation on Safety Health and environment
(PUSHe) program, they have undertaken measures to strengthen safety awareness
and social responsibility at each site.
The
construction and
commissioning of a new multi product manufacturing block this year. They expect
to start contract manufacturing of a product for a leading innovator company by
the end of this fiscal year. They are in the process of upgrading some of the
API plants in
They are in the
process of increasing the production capacity of the key products as per the
indications received from the customers for this fiscal year. Civil work on yet
another multi product manufacturing block is under progress and when completed,
they will have multiple product streams to cater to new products that are under
development.
The
Hikal has
initiated a 'Total Quality Management’ (TQM) program with the goal of improving
awareness and productivity across various departments at all sites. Hikal has
engaged external consultants to organize several training programs for its
employees.
As part of the
Corporate Social Responsibility program at Hikal, employees from the Bangalore
site have voluntarily participated in several community programs in and the
around the Jigani site.
SUBSIDIARY OPERATIONS
Acoris Research
Limited, the 100% subsidiary, has continued its efforts to establish itself as
a reputed contract research service provider targeting early stage research of
innovator and mid size pharmaceutical companies. Acoris helps customers
innovate during the early lifecycle of products with a comprehensive suite of
offerings. Acoris provides customized services, from Full Time Equivalent (FTE)
to Fee for Service (FfS) contracts, Route Scouting, Contract Research, Process
Development, Scale up, Analytical Method Development and cGMP (kilo)
Manufacturing, among other services.
Acoris has
registered a considerable increase in its turnover for 2010-11 as compared to
the last fiscal year. The strategy of targeting large innovators and small to
medium size companies in the early lifecycle of their pharmaceutical product
development has been successful. The ongoing marketing efforts of Acoris have
started to yield results. Acoris has successfully delivered a few test projects
which have resulted in inquiries from existing clients.
The easing of the
credit situation which many pharmaceutical companies depend on to fund new
projects in research and development has resulted in Acoris winning some
projects from new customers. Acoris has successfully penetrated the Japanese
market to provide cost-effective solutions for Japanese pharmaceutical
companies. Successful scale up of Acoris-developed processes on a few projects
from gram scale to a few hundred kilograms has resulted in repeat orders for
company.
The strategy of
Acoris targeting the early stage development pipeline of the innovator
pharmaceutical and biotech companies to ultimately secure part of the contract
manufacturing opportunity for subject's manufacturing plants is proving to be
successful, albeit slowly. Ultimately, there are many regulatory hurdles which
pharmaceutical companies must go through before the candidate drug gains
approval. In the event of the molecule which Acoris has worked on succeeds,
there is a very good chance that subject will manufacture the product in one of
its state-of-the-art US FDA plants. To realize a higher strike ratio, Acoris
has been expanding and continues to expand its technology toolbox, offerings
and customer base.
Acoris has
advanced facilities including a cGMP kilolab to meet the specific requirements
for process and product development of customers. Its modern infrastructure is
managed by a professional team of seasoned executives, chemical engineers and
internationally trained scientists.
The addition of
Acoris has increased subjet's visibility by offering services to potential
customers early in the product development phase all the way up to commercial manufacturing
of the molecule. It enhances the value proposition to potential clients by
creating a long-term relationship with clients starting at early development
all the way through to manufacturing.
Acoris has been
successful in penetrating the Japanese market as well the European and US
markets. They expect Acoris to increase its revenue substantially for FY 2011
and eventually create additional business opportunities for subject on the
manufacturing side.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
SUMMARY ANALYSIS
Over the past few
years, the global pharmaceutical market has been facing multiple pressures
arising from increasing R and D costs, the implementation of cost control
measures by developed countries, issues related to pricing of patented products,
and the absence of a strong product pipeline. By 2014, the top 10 innovator
companies alone would face the expiry of patents on brands that generated
revenues in excess of US$ 120 billion (sales in 2008). With the increase in
overall healthcare costs, several countries are currently implementing strong
pro-generic policies with stricter norms for reimbursement of costs.
Further,
established drug prices are also being subjected to increasing pressure as part
of the trend towards stricter pharmaceutical cost containment policies with
reference pricing schemes (regulating drug reimbursement levels using a
reference price cap) being extended to include therapeutic rather than merely
generic reference pricing programs.
The growing use of
generic and branded generics drugs has led to pharma companies reorganizing
their strategies by focusing on the generic and branded generics business in
developed as well as developing countries for higher growth. Pfizer, Novartis
and Sanofi Aventis have committed to generics and have in-house generic
businesses (Greenstone, Sandoz and
The emerging
markets are expected to touch US$ 400 billion by 2020, with
CROP PROTECTION INDUSTRY
After the robust
market growth of FY 2009, FY 2010 was disappointing for the agrochemical
industry with a number of agrochemical product prices, particularly glyphosate,
declining. This coupled with a decline in crop prices contributed to a fall in
the agrochemical market value in 2010.
The market in 2010
was characterized by weaker glyphosate prices with price discounting for many
products continuing. However in the latter half of the year, crop prices began
to increase, leading to growth in the market in most regions during the period,
particularly
In the current
year, growth in the Latin American market has continued, sustained by higher
crop prices resulting in an increased soybean planted area. In the
The outlook for he
crop protection market in 2011 appears to be far more positive than 2010. The
outlook for the sector at the start of the year was very positive due to low
crop stocks and strong crop commodity prices. A degree of stability is
returning to the glyphosate sector. However, the good start to the year may be
deflated by adverse weather notably flooding in parts of
With the slowdown
in overall growth, there lies an opportunity for companies such as subject to
be part of the integrated supply chain for the manufacture of on patent and
generic active ingredients. Cost pressures along with market consolidation
among major players in the agrochemical industry presents an opportunity for
subject as a reliable contract manufacturer. Innovator companies looking to
maintain their current market share and cost competitiveness are approaching
subject to utilize its technological abilities and research and development
skills to streamline processes for existing molecules and remain competitive on
the manufacturing side.
They expect 2011 to
be a better year for the crop protection business given the forecast of the
existing customers.
CROP PROTECTION OPERATIONS
In the year
2010-11, the revenues of the crop protection division were Rs.1734 million as
compared to Rs.1791 million, a decline of 3%. The decrease in sales was
primarily due to the inventory correction of major multinational crop
protection companies.
The new
multipurpose plant at Taloja was constructed and validation was completed this
financial year. The second production campaign of an 'on patent active
ingredient' was successfully commercialized. The pilot plant successfully
completed small quantity manufacturing of six molecules intended for commercial
production at different company sites. Of these molecules, five were for the
crop protection industry in various stages of development.
The Mahad site is
currently manufacturing intermediates and herbicides for the crop protection
industry. They have upgraded one of the manufacturing plants which will be used
to manufacture pharma intermediates for the domestic market. They also have
plans to utilize this plant for captive consumption for some of the active
pharmaceutical ingredients.
They have upgraded
the effluent treatment system on site and would be recycling a large part of
effluent waste in line with the environmental, health and safety policy. They
expect FY 2011-12 to yield better prospects from the agrochemical division once
the inventory de-stocking cycle comes to an end. They expect to sell additional
quantities of the existing products to the customers in the next financial
year.
PHARMACEUTICAL INDUSTRY
Due to the looming
patent hurdle causing a significant slowing in branded sales, coupled with
ongoing R and D challenges, branded pharma is implementing a number of
strategies to drive sales and profitability going forward: product innovation,
diversification and cost-containment.
With the era of
the traditional blockbuster growth model coming to an end, pharma companies are
moving towards innovative, often biologic therapies for niche indications with
a high unmet need to gain market superiority and drive future sales growth.
However, such strategies are often long-term and entail significant risk.
Pharma companies are increasingly looking to expand beyond branded pharmaceuticals
in the developed markets, towards generics and biosimilars, entry into the
emerging markets, as well as looking at outside pharmaceuticals altogether.
While it can mitigate a company's risk, margins can be diluted.
Mergers and
acquisitions (M and A) offer the opportunity to grow scale and cut costs
through elimination of duplicate operations, while externalization of research
and development (R and D) enables low-risk access to innovative products.
Ultimately, such strategies can be used to increase profitability, although M
and A - at least in the long term - is not a sustainable strategy.
In 2010, Subject
experienced a slowdown from inventory corrections at the customer level. The
impact of the downturn, along with the volatility in the Rupee, resulted in
lower sales and profitability. The challenges faced by the industry as a whole
present an opportunity for a CRAMS player such as subject which has strategies
to drive sales and profitability such as product innovation, diversification and
cost-containment. Outsourcing of contract research and manufacturing for Indian
companies have grown substantially last year and are expected to grow over the
next few years.
FINANCIALS
2010-11 was a
challenging year for company as we were affected by continued de-stocking of
inventory by the customers. The turnover of the company has decreased to
Rs.4935 million from Rs.5360 million in the previous year; resulting in a
decrease of 8%. It is mainly due to reduced off take of the products by
customers who were trying to cope with the economic slowdown in Europe and
Despite a
challenging business environment, the company has achieved a net profit of
Rs.443 million compared to Rs.602 million in the previous year, a decrease of
26%. The fourth quarter financial results have signaled a recovery with a
strong order book indicating increased business both in pharmaceuticals and
crop protection for existing and new products.
Exports for the year
decreased to Rs.3463 million, (70% of total sales), from Rs.4700 million in the
previous year (88% of total sales); a decrease of 26% versus last fiscal year.
They have increased the geographical distribution of products and have
increased sales to the fast growing companies in the local market. It is in
line with the strategy to diversify the customer base and broaden the supplies
to domestic companies who have a growing market share in varied geographies.
The EBITDA
decreased from Rs.1790 million to Rs.1282 million, a decrease of 28%. However,
profit after tax was down by 26%, from Rs.602 million to Rs.443 million. It was
mainly due to lower off - take by some of the major customers, resulting in
reduction of sales.
The shareholders'
funds of the company increased from Rs.3990 million to Rs.4217 million, an
increase of 6%. The overall long-term debt increased due to the repayment of
the foreign convertible currency bonds (FCCB).
Inspite of these
developments, the debt to equity ratio remained constant at 0.99. Net current
assets increased by 12%.
Despite the lower
sales and profitability, they recommend a dividend of 60% based on the positive
forecast of customers. The foreign currency convertible bonds (FCCBs) of US$ 12
million were redeemed by investors in October 2010.
The improvised
mark-to-market loss on foreign exchange fluctuations on forward/ options
contracts to hedge for future exports has reduced from Rs.459 million to Rs.295
million.
They expect to
further improve the profitability and reduce the long-term debt in 2011-12.
They continue to identify areas in which we can strengthen our financial
position despite an increase in interest rates.
PHARMACEUTICAL OPERATIONS
For the year
2009-10, the revenues of the pharmaceutical division stood at Rs.3201 million
as compared to Rs.3574 million in the previous year, a decrease of 10%. It was
due to the regulatory issues faced by a major customer and continued
rationalization of inventory from some of the large customers.
The fourth quarter
financial results have signaled a recovery with a strong order book indicating
increased business for existing and new products.
They have
introduced two new pharma intermediate products at the Panoli site. These have
been validated at the plant scale and successfully passed the customer audits.
They expect to start commercialization of these products towards the end of
this fiscal year. Commercial trials of a new product from R and D were
successfully initialized at the plant level. In order to meet GMP requirements,
an existing manufacturing block and warehouse were refurbished. They have also
submitted an application to get approval from the Japanese regulatory authority
(PMDA) for this site. At the new multipurpose plant, several measures have been
taken to reduce the carbon footprint at the site in lieu of the increased
production at the site.
Under the internal
Project Upgradation on Safety Health and environment (PUSHe) program, they have
undertaken various measures to strengthen safety awareness and social
responsibility at each site including Panoli. At the
They are in the
process of increasing the production capacity of the key products as per the
indications received from the customers for this fiscal year. Civil work on yet
another multi product manufacturing block is under progress. When completed,
they will have multiple product streams to cater to new products that are under
development.
The
Subject has initiated
a 'Total Quality Management' (TQM) program with the goal of improving awareness
and productivity across various departments at all sites. Subject has engaged
external consultants to organize several training programs for its employees.
As part of the
Corporate Social Responsibility program at company, employees from the
SUBSIDIARY OPERATIONS
The addition of
Acoris, the 100% subsidiary, has increased subject's visibility by offering
services to potential customers early in the product development phase all the
way up to commercial manufacturing of the molecule. It enhances the value
proposition to the potential client by creating a long-term relationship with
the client starting at early development all the way through to manufacturing.
Acoris has been
successful in penetrating the Japanese market as well the European and US
markets. They expect Acoris to increase its revenue substantially for FY 2011
and eventually create additional business opportunities for subject on the
manufacturing side.
CONTINGENT
LIABILITIES
|
Particulars |
As on 31.03.2011 Rs. in millions |
|
Bills discounted
with banks |
815.450 |
|
Guarantee provided
to DBS Bank for borrowing made by subsidiary |
301.460 |
|
Estimated amount
of contracts remaining to be executed on capital accounts and not provided
for (net of advances) |
67.560 |
FIXED ASSETS
·
·
Leasehold land
·
Building
·
Plant and
Machinery
·
Electrical installation
·
Office
Equipments
·
Furniture
and Fixtures
·
Vehicles
·
Ships
UNAUDITED FINANCIAL
RESULTS FOR THE QUARTER ENDED JUNE 30, 2011
|
Particulars |
Quarter Ended (Rs. in
Millions) |
|
Sales / income from operations |
1468.700 |
|
Less: Excise duty |
40.700 |
|
Net sales /
income from operations |
1428.000 |
|
Total expenditure |
|
|
a) Decrease /(Increase) in stock in trade and work in
progress |
35.700 |
|
b) Consumption of raw materials and utilities |
776.800 |
|
c) Employees cost |
139.100 |
|
d) Depreciation |
102.600 |
|
e) Other expenditure |
145.400 |
|
f)
Total expenditure |
1199.600 |
|
|
|
|
Profit from operations before other income, interest and impact of
forward contracts |
228.400 |
|
Other Income |
13.800 |
|
Profit Before Interest and impact of forward contracts |
242.200 |
|
Interest and finance charges |
112.700 |
|
Profit from ordinary activities before tax and impact of forward
contracts |
129.500 |
|
- Exchange loss |
19.900 |
|
- Reversal of cash flow hedge reserve (Refer note no.2 below) |
(37.100) |
|
Profit after impact of forward contracts but before tax |
146.700 |
|
Provision for taxation |
|
|
- Current taxes |
29.300 |
|
- Minimum Alternatives Tax credit |
(29.300) |
|
- Deferred tax |
1.700 |
|
Net Profit after tax |
145.000 |
|
Paid-up equity share capital |
164.400 |
|
Reserves excluding revaluation reserves |
|
|
Earnings per share ( face value Rs. 10/-) |
|
|
- Basic |
8.82 |
|
- Diluted |
8.82 |
|
- Cash |
15.06 |
|
Public shareholding |
|
|
- No of shares |
5125363 |
|
- Percentage of shareholding |
31.18% |
|
Promoters and promoter group shareholding |
|
|
a) Pledged / Encumbered |
|
|
- No of shares |
-- |
|
- Percentage of shares (as a % of the total shareholding of promoters
and promoter group |
-- |
|
- Percentage of shares (as a % of the total share capital of the
company) |
-- |
|
b) Non-encumbered |
|
|
- No of shares |
11314737 |
|
- Percentage of shares (as a % of the total shareholding of promoters
and promoter group |
100.00% |
|
- Percentage of shares (as a % of the total share capital of the
company) |
68.82% |
Notes
1.
The above results were reviewed by the Audit
Committee and approved by the Board of Directors at their meeting on July 28,
2011
2.
The Company had early adopted the principles of
hedge accounting as set out in Accounting Standard 30 – Financial Instruments:
Recognition and Measurement issued by the Institute of Chartered Accountants of
India. With effect from April 1, 2011, the Company changed its method of
accounting related to forward contracts and long term foreign currency monetary
items by recognizing exchange difference in the profit and loss account
in the period in which it arise in accordance with Accounting Standard 11 – The
Effects of Changes in Foreign Exchange Rates. Accordingly, the Company recorded
net exchange loss of Rs.5.400 millions in the profit and loss account
pertaining to the current quarter and transferred the balance of Rs.37.100
millions appearing in Cash Flow Hedge Reserve as at 31 March 2011 to profit and
loss account in the current quarter. Had Company continued following
principles of Accounting Standard 30, the profit before tax for the quarter
ended June 30, 2011 would have been lower by Rs..54.900 millions.
3.
The Company has entered into
forward/options contracts to hedge its exposure to fluctuations in foreign
exchange for approx 30% of future exports. These covers have been staggered
over the next three years as the major percentage of the company's turnover is
realized from exports. The Company is of the opinion that the result of these
transactions represent unrealised losses that are notional in nature .
The management is of the opinion that the fluctuation in currency movements
against hedged contracts gets compensated by realization of a higher value of
sales realizations and therefore, the actual profit/loss against such
outstanding contracts crystallizes only on maturity of such forward contracts.
The gain/ loss on these transaction will be recognised as and when they fall
due. The mark to market valuation loss is Rs.255.000 millions as on June 30,
2011 (corresponding previous period as on June 30, 2010 Rs.514.400
millions)
4.
The results for the quarter ended June
30, 2011 have been subjected to "Limited Review" by the Statutory
Auditors of the Company.
5.
There were no investors complaints at the beginning
of the quarter. During the quarter one complaint was received and same was
resolved during the quarter, therefore no complaints were pending as on June
30, 2011.
6.
Figures for the previous period/year have been
regrouped / reclassified wherever necessary.
WEB DETAILS
BOARD OF DIRECTORS
Baba Kalyani, Chairman
Baba Kalyani is the Chairman of subject and Chairman
and Managing Director of Bharat Forge Limited. Mr. Kalyani is an M.E. from
Birla Institute of Technology and Sciences, Pilani and an M.S. from
Massachusetts Institute of Technology,
Jai Hiremath, Vice Chairman and
Managing Director
Jai Hiremath is the Vice Chairman and
Managing Director of subject. A Chartered Accountant from
Mr. Hiremath is the President of the Indian
Chemical Council (ICC) and the Chairman of the Chemical Committee of the
Federation of Indian Chamber of Commerce and Industry (FICCI). He is a member
of the Western Regional Council as well as the National Committee on Drugs and
Pharmaceuticals and Chemicals and Petrochemicals of the Confederation of Indian
Industries (CII). Mr. Hiremath is a board member of National Safety Council
(NSC) of
Sameer Hiremath, Deputy Managing
Director
Sameer Hiremath is the Deputy Managing
Director and Board Member of subejct. His responsibilities include overseeing
the day to day operations and strategic direction of the company. Mr. Hiremath
did his Chemical Engineering from MIT (Maharashtra Institute of Technology),
Pune and an MBA cum M.S. degree in Information Technology from
Mr Hiremath started his career at company in
1996 as "Executive - Planning and Coordination". He went to train in
"manufacturing operations" at Merck and Co., NJ. His experience with
Merck helped him to understand the quality and safety culture which is expected
by multinational companies around the world. These standards are now an
integral part of the company's culture and diligently followed at every site.
Over the years, he has held various positions at subject including that of
Executive Director, in 2003. He has over 15 years of experience in operations,
manufacturing and management.
Under his leadership, Subject established
the pharmaceutical division in 2001 which has become the leading driver for
growth in terms of revenue and profitability. Along with his father, Jai
Hiremath, they have built subject into a world class leading research, contract
and custom manufacturer of Pharmaceutical and Agrochemical Ingredients.
Mr Hiremath likes to travel and play tennis
in his spare time. He is passionate about wine and western classical music. He
resides in
Kannan Unni, Board Member
Kannan Unni brings a wealth of experience in
crop protection and marketing to subject. Mr. Unni is a pioneer in crop
protection and increasing the farm yield in
Dr. Peter Pollak, Board Member
Dr. Peter Pollak is a Ph.D. in Chemistry
from the Swiss Federal Institute of Technology,
Prakash Mehta, Board Member
Prakash Mehta is an advocate and a solicitor
advising subject on all legal issues. He has more than 30 years of experience
in business, industry and legal matters. Mr. Mehta is a partner in Malvi
Ranchoddas and Co., a reputable law firm based in
Shivkumar Kheny, Board Member
Shivkumar Kheny has extensive industry
experience, specifically in steel and infrastructure development. Mr. Kheny is
a Director on the Board of several reputable companies and a member of the
Governing Councils of prestigious educational institutions.
Sugandha Hiremath, Board Member
Sugandha Hiremath has more than 20 years of
experience in business and finance. She is a Director on the Board of several
companies.
Dr. Wolfgang Welter, Board Member
Dr. Wolfgang Welter studied chemistry in
MANAGEMENT
COMMITTEE
Ashok Anand, President –
Pharmaceuticals
Ashok Anand has
more than 35 years of experience in the pharmaceutical industry. He is a
pharmacy graduate with a post graduate degree in marketing management. He
joined subject in 2004 and currently serves as President, Pharmaceuticals.
Prior to joining subject, Mr. Anand held senior positions in reputed
pharmaceutical companies such as Nicholas Piramal and Johnson and Johnson.
Satish Sohoni, Senior Vice
President, Crop Protection
Satish Sohoni
joined Hikal in 2007. Currently, he serves as Senior Vice President responsible
for the Agrochemical business. Mr. Sohoni holds a Bachelor's Degree in Commerce
from
Sham Wahalekar, Senior Vice
President, Finance and Company Secretary
Sham Wahalekar has
more than 34 years of experience as Head of Financial Operations and Company
Secretary in several reputed organizations. He is an M.Com (Hons), L.L.B, and
ACS. He has extensive experience in Corporate Law and Financial Management. He
has been with subject since inception and currently serves as Senior Vice
President and Company Secretary.
Ravi Khadabadi has
a double Master's Degree in Chemistry and Polymers. He has more than 25 years
of experience. He joined subject in 1997 and currently serves as Vice
President, Purchase. He is responsible for all procurement functions of the
company. Prior to joining Hikal, Mr. Khadabadi was an entrepreneur.
Anish Swadi, Vice President,
Business Development
Anish Swadi joined
subejct in 2005 and currently serves as the Vice President for Business
Development. Apart from Corporate Finance, he is responsible for IT and Public
Relations. Prior to joining subject, he worked as an International Financial
Advisor with Merrill Lynch. He holds a Bachelors degree in International
Business and Finance.
PRESS RELEASE
Q1 Results - Net sales up by 7.2%; EBIDTA up by 5.5%
Mumbai, July 28, 2011: Hikal Limited, the preferred long-term outsourcing partner for leading
global life sciences companies, today announced its financial results for the
first quarter ended 30th June, 2011.
Performance highlights for the Quarter ended 30th June, 2011
·
Net sales up by 7.2% to Rs.1428.000 millions as
compared to Rs.1332.000 millions in the corresponding quarter of the previous
year.
·
Crop protection sales up
by 13.1 % to Rs.478.000 millions as compared to Rs.423.000 millions in the
corresponding quarter of the previous year.
·
Pharmaceutical sales up by 4.5 % to Rs.950.000
millions as compared to Rs.909.000 millions in the corresponding quarter of the
previous year.
·
The EBIDTA
for this quarter showed a growth of 5.5
% to Rs.345.000 millions as
compared to Rs.327.000 millions
in the corresponding quarter of the previous year
·
Net Profit was down 1.5% at Rs.145.000 millions as
compared to 147.300 millions in the corresponding quarter of the previous year.
Commenting on the results, Jai Hiremath, Vice Chairman and Managing
Director, Hikal Limited said, “We have had a good start to this
financial year. Our revenues are up by 7.2 % to Rs.1428.000 millions. Our
pharmaceutical business has grown by 4.5%, while the crop protection business
has grown significantly by 13% this quarter. Our EBIDTA for this quarter has
increased considerably by 5.5% in spite of the rupee appreciation. The forecast
from our customers for the remaining year is encouraging and we expect improved
results for the year.”
About Hikal:
Hikal is a
reliable long-term outsourcing partner to companies in the Pharmaceuticals,
Crop protection Products, and Specialty Chemicals industry. The company has
been supplying key active ingredients (AI) and intermediates, manufactured
using stringent global quality standards, for its customers in the
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records 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.45.94 |
|
|
1 |
Rs.74.28 |
|
Euro |
1 |
Rs.64.97 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
6 |
|
--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 |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
58 |
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 |
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 |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.