Key highlights

• After growing by about 15% in FY'13, Pharama industry, as per the management, grew by only 9% in April'13. Management expects the industry to grow by around 13% for FY'14 and Unichem laboratories to do better than the industry by about 200 bps.

• As per the management, in past 8-9 months, the company had taken lot of avenues in terms of re-organization and re-alignment of products, manpower and this has resulted in better product mix, effective cost control and will benefit in FY'14 in terms of higher volumes and better productivity.

• Both Acute and Chronic division are performing well. Also major sub divisions, within the group, have also started contributing. For example, UVA division which constitute about 53% of Acute division sale, grew by about 18% and CV division which constitute about 56% of Chronic division, grew by about 11%, higher than the market.

• During Q4 FY'13, on standalone basis, net sales grew by 26% y.o.y. Domestic branded formulations grew by 28% y.o.y and international formulations grew by 29%. For FY'13, on standalone basis, net sales grew by 25% y.o.y. Domestic branded formulations grew by 19% y.o.y and international formulations grew by 56%.

• Internationally, while it is difficult to project the growth due to business being contractual in nature, overall about 25% growth can be expected in FY'14.

• Indore SEZ sale is yet to be approved by the Government bodies. If the sale goes through, the company will receive about Rs 150 crore.

• The company has sufficient capacity for next 2 years, however for exports, if it gets some contractual business, then the land near the Goa plant will be used for expansions, which will costs around Rs 125 crore. Management also is looking out for some inorganic opportunities in Therapeutic space in domestic market.

• On its subsidiaries business, for FY'13, the UK subsidiary reported sale of 10.77 M Pound and reported a profit of 0.10 M Pound as compared to a loss of about 0.19 M in pound in corresponding period last year. The US subsidiary, however continued to remain in loss although, loss being reduced from $ 0.75 M for FY'12 to about $ 0.60 M for FY'13. Higher losses are as a result of higher costs and lower volumes in US.

• Brazil subsidiary also reported loss of about 2.97 M Reals and Ireland subsidiary, which was acquired in FY'13, reported loss of about 0.29 M Euro for period ended FY'13.

• Management's endeavor is to turn the Brazilian and Ireland subsidiary into profits by FY'14, while US will take some more time. In next couple of years, the subsidiaries will be in a position to contribute substantially in terms of margins and profits to the Parent.

• For FY'14, management expects a further room of 150-200 bps margin improvement in standalone business. Product mix and cost control initiatives will ensure the same.

• Overall tax rate including some deferred tax credit, will come to around 23%.