Business Updates
- The first phase of capacity expansion is over and new machinery has been added which has enhanced capacity from 1.2 billion units to 1.5 billion units which will be further enhanced to 1.8 billion units by the year end for medical devices
- Renal, cardiology and critical care remain the focus area for the company
- Once the gamma sterilization plant is complete the company will move on to this process on its own which is currently being outsourced
- The company is investing in AI based tools for its sales people which in training has been seen to help the business
- The first sale of infusion products in USA has started and hopeful that the new equipment will be ready by end of the year. There are 4 FDA approvals already and 8-10 new approvals should be in place in the next 12 months
- The outlay for the PLI scheme is too less to make a difference and has not helped the equipment industry as of now and the company continues to work with the government to change the modalities of the scheme
- The board has given an approval to raise up to Rs 1000 crores through a QIP which will be utilized to build 3-4 new facilities and this money will help in scaling up faster. The fund will also be used for technological capabilities to enhance the cycle of introducing new products faster to the market. This will be via inorganic route
- There is keen interest from foreign investors in medical technology space and post covid the fund availability has improved drastically
Participants
Ambit Capital
Elara Capital
KGMG Finserve Group
Dalal & Broacha
ICICI Bank
Bonanza Portfolio
QnA
- The Vision 2030 is focusing more on how growth can be faster than what is being seen in the domestic market and growing at 20% plus versus industry growth of 12% through import substitution
- The coverage in India hospitals is still at 40% and there is scope for deepening the engagement with the existing hospitals
- The infusion products have a share of 60-65% to the total revenues of the company
- The guidance for FY25 for capex remains at Rs 250 crores
- The capex from next year will be Rs 400-500 crores yearly for the new growth that is envisaged
- Q1 has seen a 40% growth for the dialysis business and the target for the whole year is around Rs 130 crores
- Almost 60-65% of RM is still imported and there are almost 250 suppliers all across the world and hence an inventory of around 2.5 months is kept. On the finished good side no inventory is maintained for exports while for domestic market 1 months is maintained
- All the four new plants will be at new locations near the current plant but not at the same location
- There is a two year time line in terms of construction of a plant and getting all approvals in place for the plant to produce and sell and the approval for exports is even higher and thus the timeline from completion to getting approval is 4-5 years for a new plant
- The plant in China is being closed down because the lease period will expire in 24 months and the cost structure is higher than that of India plant
- The main areas in which products will be sent for FDA approval is vascular and critical care
- The locations of the new plants will be Jaipur, Faridabad and Haridwar and one new plant in a medical park can be setup
- In terms of volume the company has 10% market share in the world in the IV canula business
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