Ajanta Pharma

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FY15 results on May 08, 2015
Ajanta Pharma Ltd has informed that a meeting of the Board of Directors of the Company will be held on May 08, 2015, inter alia, to:

  1. Consider and approve the audited Financial Results of the Company for the quarter and year ended March 31, 2015;

  2. Consider and approve Financial Statements for the year ended March 31, 2015.

  3. Recommend dividend, if any, on equity shares of the Company for the financial year 2014-15.

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Company made margins of 38.2% in 4QFY15. Is that possible?

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These are the margins of Sun Pharma over past 10 years. So its possible to earn it, but very difficult to sustain it.

Disclosure: Hold Ajanta Pharma

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Do not compare margins of Sun Pharma, it has a SPARC to pickup the major R&D burden. For companies like Ajanta putting in high R&D (including the elevated ANDA filing costs) sustaining that high OPM might be difficult.

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Even sun pharma spends over 6% of its turnover on R&D. Is it right to say sparc R&D is used by sun pharma ? Sparc is into new molecule R&D , a different space completely?

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Ajanta has major presence in segments of cardiology, ophthalmology and dermatology. The latter two have got very high margins.

Actually Ajanta has very little presence in the typical me too kind of segments where margins are lower.

Plus exports contribute more than 60% to total sales and most of these are branded products which always command higher margins than generic or bulk drugs.

Maintaining margins may not be all that difficult. Improving on already registered margins might be a tough task.

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Anybody from Bangalore traveling for AGM to Mumbai?

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What is the procedure to apply for AGM. Do we need to fill any form or we can directly walk in?

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Hi,
You can get the AGM attendance slip at the following link - http://www.ajantapharma.com/investor-relation.html

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Any idea on efficacy of Wrinclar anti wrinkle cream mentioned so proudly by MD of Ajanta in its latest AR???

costs a bomb 15 gm for Rs 410.no wonder co enjoys such fat margins.Any competitive product n if so whats the price range n composition? is the composition same?

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India’s organic skincare market to cross Rs 1,000 crore in next five years

Rising awareness and changing lifestyle are key growth drivers

Organic living is seen as an established trend in developed countries and the concept is fast catching up in India with consumers opting for organic products for daily life. The trend of ‘Go Organic’ or ‘Live Organic’ is catching up in the skincare segment too. Increasing awareness towards beauty and wellness, and rapidly changing life-style are some factors that attribute to the growth in this sector. Organic skincare market in India is estimated to grow two-fold in next five years and cross the mark of Rs 1,000 crore by year 2020, according to promoter sisters of Azafran Innovacion, an integrated ‘Farm to Face’ player offering innovative skincare solutions.

http://www.financialexpress.com/article/pharma/latest-updates/indias-organic-skincare-market-to-cross-rs-1000-crore-in-next-five-years/89366/

Possible new market for Ajanta to cater to?

Based on the falling IPM data in Dermatology category in the recent IPM Health Tracker report from ICICI.

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Slightly off topic: Is anyone from here attending the AGM tomorrow? We can probably all meet up.

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please do a favor by updating on the AGM.

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Details from AGM
Mr. Yogesh Agarwal, MD, started the presentation by saying that Ajanta believes in doing Right things at right place. They focus on meeting unmet needs of patients through therapeutic products. We do this continuously as unfulfilled needs keep rising. Being first to market creates niche. In this FY Ajanta had 12 first to market products. He quoted Abraham Lincoln, “Be sure you put your feet in the right place, then stand firm”. Ajanta stands above prominent companies like Pfizer in Franco Africa. Our strategy for US market was validated as our first product was immensely successful with around 12% market share in that product category. Ajanta focuses on filing 6-8 ANDAs every year. He mentioned that they charge ANDA in first year on balance sheet though benefits are passed on to other years. Investing 80 cr in next 2 years in Kandivli. Construction work completed at Dahej and regulatory approvals process begins from this month. R&D team has 400 scientists,
3000 strong Indian marketing team and 572 emerging market sales team.
R&D spend of total income is at 5% versus 4.5% and will increase to 6% or more in coming years.
He gave some details about CSR activities. More than 40,000 cataract surgeries have been done.
Net margin 21% and EBIDTA margin 34% is amongst the highest in pharma category. Ajanta values excellence, empathy and integrity.

ANSWERS TO SHAREHOLDER’S QUESTIONS

  1. Processes and future roadmaps: We continue to focus on branded business, India and emerging markets. Addition is US business. You are aware of delays of USFDA all across the world. We now see light at end of tunnel. US business not contributing much. Hopefully, approvals will start coming soon. As soon as they come, we will start business. Front end etc is put in place, we are ready for business in USA. In one product alone, 12% market share. This means that we are able to cater to the needs of the market.
  2. 400 crores + in R&D and office expansion is planned to be spent over the next few years.
  3. We develop products only for ourself and not other players, R&D spend would go 6% or high.
  4. We try to strike a balance in the dividend payout and company’s needs.
  5. Plot which we purchased in Kandivli. 10,000 sq. Ft plot for warehousing or R&D.
  6. Plan is to stay focussed in the existing therapeutic segments. Having said that, we are actively looking for other therapeutic segments.
  7. New plants: Full write off of Turkmenistan. Prudent decision to take for write off. Dahej - risk mitigation has been done quite well.
    We are quite comfortable in that space.
  8. Depreciation will slightly go up. The new facility is in SEZ. First 5 years we are tax free
  9. We were not present actively in Russia and Venezuela and hence no forex problem.
  10. Regarding USA, we are waiting for FDA to spur growth.
  11. In the next 3 years, we are not looking to enter any regulated markets except US.
  12. Product for micronutrient a niche product was sold to Govt of Maharashtra and it was a minor sale. This has been done with all compliances.
    We expect to post above industry growth in next 3-5 years despite numerous challenges.

NOTE: I have taken extreme care in reproducing the exact details as they were stated in the meeting. However, a few discrepancies may arise. Please take caution before coming to any conclusions.

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Many thanks.So your confidence of buying Ajanta is boosted by attending this AGM or not?

We should attend these AGMs .I remember Hitesh Bhai bought Symphony only after attending this AGM which boosted his confidence in the co n promoters.

I think Ajanta can also be used as a Parking Stock for using surplus cash.

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Yes, the confidence was boosted but I think I would wait for 1 or 2 more quarterly results. I believe the valuations are on a higher side.

Disclosure: More than 5% of my portfolio.

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587

I also visited Ajanta pharma AGM .
Ajanta is in my core portfolio( 25%).
I too am convinced to hold it for long duration .
I buy every month via stock SIP.

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n how has been performance of this SIP over last years Chetan?

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Vivek, SIP returns are more than the returns that I would have got by investing lump sum .

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Ajanta has shown very high consistency in ROE, sales growth and eps growth with low debt. Its consistency is comparable to that of HDFC Bank. It has the capability to grow at more than 30% for the next 2 to 3 years.
Discl: I own more than 5%.