Granules India Ltd

Few notes from Q1 FY23 con call.

General

• Raw material pricing increase has stopped—slow downward trend. We can see pricing coming down. Availability is no problem.

• Supply security is the main concern for Dicyandiamide PLI products.

US:

• We have 2/3 launches this year. We will see market share improvements next year. Launches in Q4.
• Pricing pressures are prevalent.
• Inventory building for existing products as well as new launches.
• earlier, from India to take US 24/24 days for goods to travel to the US. Now, it is taking 45 days.
• There is a shortage of containers even today. Hence we have to stock a lot of inventory.

Europe:

• Very promising launches in Europe. One/Two launches in Q2.
• Next two-year focus will be EU and Latam.
• We see a lot of potential for Paracetamol tablet launches in the EU.
• Launching new tablets in EU, so there is scope for margin improvement for paracetamol.

LatAM:

• Focus is PFI and FDS. We have made some filling; however, it may take some time. Not likely to happen in the next few quarters.

Paracetamol:

• Looking at product level cost leadership at a global level.
• As we sell more and more paracetamol tablets, margins will improve as and when it happens.

Metformin:

• Revenue has shown stability in the US.
• Instead of focusing on the US only, we got approval from the UK and soon getting one for the EU. So we are looking for increasing from UK/EU.

Capex Plan:

• Last 400 cr
• Current year 300 and next year 300 cr.

Timeline (Dicyandiamide for PLI project)-

• Capex 100 cr. Pilot studies are getting completed. Operational from less than two years from today.
• This is part of the existing 300 cr Capex.
• Initial capability is for own consumption.
• Financial contribution (new product)- More than 10 cr per year. It is very difficult to say at the moment.

MUPS:

• Couple of products are already commercialised.
• Various products at different stages of approval and seeing approval going ahead.

Revenue Growth- Upwards of 20 CAGR.

• We are focusing on cash instead of revenue growth.
• This will yield better results, and we see cash build up a little higher growth.
• Due to better inventory management and better receivable management. So see some positivity there going forward.
• If we have to do M&A, cash will not be big issue (although not actively looking into M&A)
• We are reducing long-term term debt YoY.Current long-term debt of 300 cr. In two/three years, it will be nil.
• Better cash conversion like inventory controlling measure/contract negotiations/vendor negotiations.
• From every quarter onwards, there will be positive cash build-up in the system

PAP:

• No RM issue about it. Prices are trending downwards.
• We will buy from producers who will give is better prices.
• We are already buying from Indian PAP producers.
• We helped one of the suppliers to improve PAP quality, and it is satisfactory.

EBITA Margin:

• Will creep up QOQ. Not much but trajectory upwards.

CMO/- Shall see improved sales in H2.

Biotech Process:

• The major focus is on biotransformation and building enzyme characterisation and enzyme scale-up.
• Asset but will bring up competency within ourselves.
• 75 cr towards fermentation’s capabilities
• Spentent around 20 cr on buyouts.
• We have got R&D labs and fermentation pilot done.
• Looking at this as a strategic area

Buyback:

• Promoters will participate in the buyback.