Bliss GVS Pharma Limited (BGPL) is engaged in the business of female contraceptives, soft pessaries and suppositories. The companyâs products can be divided into two categories â over-the-counter (OTC) and prescription drugs. It has a significant presence in most African markets, selling suppository formulations and anti-malaria formulations. In FY11, exports contributed over 95% of total revenues. It has its manufacturing unit located at Palghar, Maharashtra.
**Management **
S. N Kamath, managing director of the Rs 242-crore Bliss GVS Pharma, started as a salesman in his fatherâs medical shop in Mumbai. He decided to develop drugs when he was in Rwanda and came across a Chinese product for curing malaria. He followed his gut and developed a similar product â dihydroartemisinin. The drug clicked.
In 2006, Bliss Pharma â which was held by Kamath and his friend Gautam Ashra â was merged with Kamathâs privately held company GVS Pharma and became Bliss GVS Pharma. Its 2010-11 revenues were Rs 220 crore.
Bliss GVS Pharma sells in over 35 countries but nearly 90 per cent of its revenue comes from Africa. The company manufactures suppositories, pessaries, anti-malarial tablets, dry syrups, injectables and ointments. It has a portfolio of some 60 products in the anti-malarial segment. Its most popular drug is â Lonartâ, which is sold in African markets such as Ghana, Rwanda and Tanzania. Suppositories and pessaries is a niche segment with limited competition. Zydus Cadila is the only Indian rival in this segment.
The company is renowned for manufacturing and marketing a most unique product**‘Today’**which is a Vaginal Contraceptive, a safe female contraceptive aimed at furthering planned parenthood and is also an established method for preventing conception.Bliss also manufactures wide range of Pessary Formulations, Suppository Formulations, Calcium Preparations, Protein Powders, Iron Preparation, Antibiotics, Analgesic and Antipyretics, Respiratory, Anti-inflationary, Dermatological Preparations etc.
In 2009, Mr.S.N.Kamath, Promotor and Managing Director received a National Award from GOI in recognition of outstanding performance under medium enterprises segment. The company also received outstanding Export Performance award in 2008-09 from Pharmexcil.
KEY HIGHLIGHTS
**Entering newer markets **
The majority of BGPLâs revenues are earned through exports. In FY11, exports contributed ~95% of total revenues. The management is exploring new markets such as the UK, South Africa, Genoa and Latin America. Presence in diversified markets reduces the risk of slowdown in a particular market owing to recession or macroeconomic problems. In FY10, the company started supplying antimalarial and anti-fungal medicines in African markets, where there is huge demand for such products.
**On an expansion spree **
BGPL is expanding manufacturing capacity at the Palghar plant; the expansion is expected to be completed by September 2011. This plant will produce suppositories. The management is expecting approval from the UK drug regulator, the MHRA, for this plant. The company is also planning a capex of Rs 350-400 mn in FY12, for the development of its research and development centre.
**JV with a prominent Middle East player **
In FY10, BGPL signed a joint venture (JV) agreement with Kuwait Saudi Pharmaceutical Industries Co in Kuwait for establishing a suppository line manufacturing facility. With this JV, it is likely to be a prominent manufacturer of suppository formulations in the Middle East. Products in suppository formulations segment are rectol, vomitin, conlax, anomex, glycerin, etc.
Virtually a zero debt company
Bliss GVS Pharma is virtually a zero debt company. This scope of leverage is a big boost in its expansion plans in the future and given the quality of the management this leverage can be used to catapult the company into one of the most versatile Pharma companies in Africa & the MiddleEast.
**Strong Financial Performance & aggressive targets for FY12 **
The company has an excellent track record as far as financials are concerned.
This trend is likely to continue given the growth prospects of the company. The company is targeting a sale of about 250 crores by FY12. The margins are expected to target an EBIDTA of 25%-28% thereon normalizing for the next couple of years. Stock is currently trading at around 5 P/E, which is cheap for a pharma company.
Other Highlights
OPM% around 28% and NPM% around 19%
Debt free company
Steadily Increasing promoter holding. presently 64%
Asset Light business
90% of business is from anti malarial drugs and export to African countries
Company will be required to make higher tax provisions in future due to withdrawal of EOU benefits
Consistent Dividend paying company
Area of Concern
Debtors of almost 200 days. Need to understand this more since this is very abnormal. Also, even with such high debtors the company has remained virtually debt free. Needs to be investigated further as it can also point to some kind of window dressing. If the company is availing tax benefits, it is not very difficult to account for sales
However, the company has maintained that all its exports are insured by ECGC and no there are no doubtful or bad debts
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