As per Chairman company is now committed to focus in three
sectors: Pharmaceuticals, Financials and Information Management with
substantial investment in each. Company
acquired Decision Resource Group (DRG).
DRG caters to the healthcare industry to provide research, information
and analytics solutions. Company also
acquired Bayer’s imaging business and they have submitted the imaging agent (Florbetaben)
for approval to USFDA and EMA. Company
also grew the NBFC business to invest in real estate and education sector. They also made investments into infra-structure
sector with investments of 925 cr.
Company has had revenue growth of 51% overall. In the Pharma line of business, the contract
manufacturing business continued to grow its revenues (1553 Cr). The critical care business continued to grow
(616 Cr) helped by Servoflurane growth
in US. Launch of this into Europe and
Desflurance in the future augurs well for sustaining the growth. They have infrastructure to sell hospitals in
100 countries. OTC and Opthalmology grew (271 Cr) above industry growth rates
and their JV with Allergen continue to dominate in marketshare in Opthalmology
products .
NCE unit had a pipeline of 13 drugs with 11 of them in
clinical trial phase. R&D spend this
year has been around 287 Cr. Couples of
molecule development were discontinued this year due to safety and discouraging
results.
In Financial Services, loan book as of Mar 13 stood at 1591
Cr. India REIT had 4257 Cr as Assets
Under Management as of Mar 13. (Are
they earning anything??)
Company paid around 3871 Cr for acquiring DRG. This
company generated revenues of around 650 cr this year and EBIT of 99cr. So they seem to have paid around 5 times the
sales of this year and around 35 EBIT which seems to be on higher side. DRG had also acquired Abacus International in
Dec 2012 as part of inorganic growth strategy Rs153 Cr. Both these figure are based on Goodwill.
Most of the subsidiaries are making losses with the
exception of few. It is not very clear
about the debt structure of these subsidiaries.
Based on the segment results, the losses from pharma mfg and services
has come down compared to last year and currently stand at 154 cr. Hopefully they break even next year if
everything goes well and the growth in top line is achieved. Financial services have shown some profit of
around 262 cr, but it was lesser than last year. Information Mgmt made a profit of 99Cr. All these figures are before Interest and
Taxes. Overall after interest and taxes,
they have a loss of 211 cr.
In summary, on a consolidated level , while the topline has
grown, due to high interest payments (due to debts) they have made losses. If one sees in the past 2 years, the net
worth has reduced by 1114 cr due to losses from various businesses and dividend
payments. The debt levels of the company
has sky rocketed and DE is currently around 0.72 due acquisitions and NBFC
business.
EBITDA margins of the company have contracted compared to
last year. Overall it is very confusing
to discern information. For example
nowhere have they mentioned how much they paid for Bayer’s acquisition. Figures do not match in some cases. While the company says they have acquired DRG
for around 3400cr, the goodwill is shown as 3871cr. I do not think the company management has
been candid and transparent in their reporting of each business. While they have said about profits made, they
never made a mention of losses or what they think about future for these
businesses. This does not give me any
confidence and there seems to be too many speculative bet taken by the
management by almost behaving like a holding company. I will look to exit this business very soon.
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