Would you buy the stocks of the company that is loaded in debt, entangled in legal battles and generating crores of loss every year?
Now, in your proper senses, the chances are that you might not even look at such a company when these three factors flash on your screen. And why should you, as the chances of turnaround of such companies is too low.
Today we are going to discuss one such company named Venus Remedies.
Well, when the company is toppled with debt, covered in losses, the chances of turnaround seems very dismal and on top of that if the promoter holdings is a mere 35% which is entirely pledged, then it’s very safe to consider that the company is a sinking ship and one must stay away.
Venus Remedies was loaded with debt of INR 200 crores when the nation-wide lockdown blew the company’s plan of survival. Unlike most other industries who sulked over loss of material-in-process, Venus faced the challenge of survival; loss of in-process material only added to its challenge.
Venus has GMP-approved sterile units which were responsible for making vials. It needs to be in continuous operations, or shut down as per defined protocols which would take days and this option was not in the hands of the company. The company could have lost its GMP accreditation, which would jeopardize 75% of its revenue (accruing from exports.) Not only this but it would have lost its credibility in 80+ global destinations.
A sigh of relief with some real challenges came in April 2020 when Venus had won a huge tender from Mexico. This tender came with multifold challenges of manufacturing the product as well as delivering it on time. Now, this is COVID, we are talking about when people had relocated to their homes, logistics was completely shut down and corona virus was swinging like a sword on the neck of the people. Surprisingly, this was the largest order in the company’s history and it could not let it go.
At the operational level, getting the relocated employees to work was a daunting task due to nationwide lockdown. Despite these challenges, the team worked relentlessly to manufacture the product. Now another challenge was to transport the manufactured product to Mexico at a time when normal logistical channels were significantly disrupted. To compensate for this, the team adopted a multi-modal strategy – air, sea and surface transport – to ensure that the material reached their client safely and in time. After such tremendous work, the company delivered the product on time. This depicts the immense strength, power and sheer will of the company to succeed despite the challenging times.
Another example was during the COVID when the demand for Enoxaparin was high. Enoxaparin is an anti- coagulant featured as part of the COVID-19 treatment protocol. It was used for every hospitalization case, ICU and general ward patients alike, to prevent blood clotting. COVID-19 positive hospitalization cases escalated quickly between July & September 2020, demand for this product leapfrogged considerably and this spike transpired in a matter of weeks. While scaling up was tough owing to the sheer size, what made it more perplexing is that the API is based on a biological source, and was imported from China. Hence, the supplies were very limited. It was a question of saving lives. It was the need of the hour. It needed an extra special effort.
Venus leveraged its relation with the companies during this time to secure the API. The company airlifted the API to its facilities and emerged as the largest supplier of this product among many others who also make this drug.
Against all the odds, Venus was determined to survive when the tides were not in its favor. Today, Venus is virtually a debt free company with its eyes set to achieve INR 1000 crores revenue in FY25.
Established in 1989 in Panchkula, India, Venus Remedies Limited manufactures remedy- defining formulations addressing diverse therapeutic areas . It is one of the rare pharma companies across the world to work on Antimicrobial Resistance (AMR). It also manufactures some world-class products in critical care segments. The company is engaged in manufacturing super-specialty injectable formulations in critical care segments (such as Anticancer, Anti-infective, Neurology, Skin and Wound Care and Pain Management) having presence in domestic and international markets spread over 80 countries.
Today, the company stands among the top 10 global fixed dosage injectable manufacturers with a large basket catering to high-growth therapeutic segments. The Company’s units are certified with ISO 9001, ISO 14001, OHSAS 18001 accreditations and also approved by the European GMP, Australian GMP and other leading global regulatory authorities looking into product and quality excellence standards. The Company’s subsidiary, Venus Pharma GmbH, based out of Werne, Germany, deals in Licensing, Packaging, Product Testing, Warehousing and Logistics.
Research and development:
Company has a renowned research facility – Venus Medicine Research Centre, accredited with Global Laboratory Practices (GLP) certification, which has also been duly approved by the Department of Scientific & industrial Research, Government of India. With an in-house Research and Development, the company continuously upgrades its intellectual property wealth by consistently working towards developing novel products to address unmet medical needs, particularly in the antimicrobial resistance (AMR). It currently owns intellectual property rights of over 350 filed patents, 100 granted patents, 100+ Trademarks and 25+ Copyrights.
Venus remedies has over 3 manufacturing facilities producing 200+ products.
The company’s domestic distribution network includes 1,500+ stockists, 1,000+ multi-speciality hospitals and 50,000+ retail outlets.
New product launches in the market:
Oncology and Wound care products were launched in the Institutional Division in FY22. Moreover, the company has repositioned its brands in two Specialty & Therapeutic segments. First One in IPD (Indoor Patient Dept) with Antibiotic Critical Care Range. Second in Neurosurgery Specialty with Osmotic Diuretics & Steroid Therapy.
The company further expanded its operations to 4 more states including – Jammu and Kashmir, Punjab, Telangana and Orissa.
Strategy going ahead:
Registration of the research product in the Government and extending coverage to maximum Government hospitals are what the company looks to achieve in FY23. They have also have set the target of aggressive promotion in Orthopedic segment for its research products.
The company has a reach to 80+ countries through forging alliances and collaborations. It has presence in countries like Kenya, South Africa, Indonesia, Israel, Malaysia, Nepal, Germany, Iceland, France, Denmark, Cyprus and various others. It has 11 marketing offices outside India to cater to overseas business requirements. Exports account for more than 70% of the company’s total revenue.
Expanding its global footprints, the Company in FY22 entered new markets primarily in Africa, Europe and CIS regions. The countries include Paraguay, Latvia, Congo, Macedonia, UAE, Cuba, Rwanda, Kuwait, Zambia, Portugal, Ireland to name a few.
Strategy going ahead:
The Company has strategized to promote Oncology products in all existing as well as new markets that the Company wishes to penetrate.
Entry in Consumer Healthcare Business
In July 2021, The company decided to enter the consumer healthcare business with ‘R3SET’ Launch’ . Reset is a holistic pain management solution which ensures maximum efficacy by combining essential oils with nanotechnology. It targets to introduce various disruptive products over the next 5 years covering various key therapeutic areas.
Financial distress of the Holding company
In FY15, the lenders of the holding company of Venus Remedies approved a corporate debt restructuring package due to financial distress. The holding company failed to comply with terms of repayment approved by lenders in the corporate debt restructuring package.
During 2021, the company’s promoters and the holding company managed to release all its pledges on the company’s shares from various lenders such as HDFC, BOB, Phoenix ARC, Allahabad Bank, EXIM Bank and others. The entire shareholding of promoters & promoter group became free from all pledges in July 21.
In Sept 2020, the company agreed for a one-time settlement of outstanding dues on its NPA loans. It entered into one-time settlement of loan accounts with Corporation Bank (Union Bank of India), IDBI Bank, Bank of Baroda, HDFC Bank, and Export-Import Bank of India. It also recorded exceptional gains between 20-40 crores pertaining to one-time settlement of term loans in Q4FY21.
Future Growth Plans to achieve by 2025
- The company aims to foster innovative therapies targeting Antimicrobial Resistance.
- It further aims to achieve a turnover of INR 1000 crore.
- The group plans to establish a global presence in 100 countries.
- It aspires to improve the quality of life of the informed Indian consumer by providing best in-class healthcare solutions.
- By 2025, the company aims to achieve fiscal independence and maintain a net debt-free status.
- To adopt clean energy and ensure responsible consumption & production practices for a sustainable planet.
- The company is too focused on Oncology therapeutics. Though going forward the company is diversifying its product portfolio to other chronic diseases as well. Pain relief is also one of the fast moving markets where the company is focused now.
- Unlike other companies the company does not cater to the American market which might not help the company achieve its maximum earning potential.
- The company achieves an OPM of ~10% and this has been consistent for quite a few times which for an R&D focused company is too low.
The company’s revenue from operations increased by ~10% from INR 544 Crores in FY21 to INR 596 Crores in FY22. Interestingly, the finance cost dropped from INR 13 Crores in FY21 to almost 0 rupees in FY22. This cost dropped significantly in FY22 as the Company has repaid all its secured debt towards the close of FY21.
The Company reported a Net Profit of INR 41 Crores in FY22 against a Net profit of INR 62 crores in FY21. This drop was due to reduction in additional income of the company. The Earnings per share stood at INR 30.46 in FY22 against INR 50.05 in FY21.
Secured borrowing has dropped significantly as the Company prudently deployed cash from operations to reduce its debt burden. Current ratio improved from 2.4 as on March 31, 2021 to 3 as on March 31, 2022.This happened due to decrease in current liabilities and increase in current assets of the company. Moreover, the Company had a cash and bank balance of INR 65 Crores as on March 31, 2022
The global pharmaceutical industry is rapidly transforming across all value chains from manufacturers, providers and patients. The Indian pharma industry has achieved significant growth in both domestic and global markets during the past five decades. From contributing just 5% of the medicine consumption in 1969 (95% share with the global pharma), the share of “Made in India” medicines in the Indian pharma market is now a robust 80% in 2020. Indian pharma exports reached US$20.7 billion in FY20 with year-on- year growth of 8.4% (exports size was US$19.1 billion in 2019). They have grown at a CAGR of 6.2% between 2015 and 2020. This was largely driven by exports of generics drugs to >200 countries (including both developed and developing markets). India is the source of 60,000 generic brands across 60 therapeutic categories. The country accounts for 40% of the generics demand in the US and ~25% of all medicines in the UK. Indian pharma manufacturers export nearly half of the pharma production, both in terms of volume and value, to the US, UK, South Africa, Russia and other countries.
However, there remains a significant opportunity, largely untapped across Japan, China, Australia, ASEAN countries, Middle East region, Latin Americas and other African countries.
Government thrust on pharma: Although India is recognised as the Pharmacy of the World, it features among those countries with the lowest public healthcare budget in the world. Government has taken significant steps in order to boost pharmaceuticals sector as a whole which include
- Allocated INR 64,180 crore for the Atma Nirbhar Swasth Bharat Yojana for development of primary, secondary, and tertiary healthcare over a period of six years
- Announced INR 2,23,846 crore budget outlay for health and well-being for FY 2022, an increase of 137% over previous year
- Provided for INR 35,000 crore towards Covid-19 vaccines and national rollout of pneumococcal vaccines to help save over 50,000 lives annually
- Budgeted INR 6,429 crore for the health insurance scheme, Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana and many more.
Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah
Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?
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