Bliss GVS Pharma

Dear All,

This stock was completely off my radar since I was just unable to get a grip on figures, esp debtors. In next couple of weeks, will again go through it and revert.

Hi Mashesh,

Both products and financials seem nice. The co has done quite well over last 10 yrs and today is growing well with decent ratios. The co is debt free and pays out decent dividend too.

The annual report also looked good at a quick glance.

However, once needs to figure out the reasons for so high working capital.


Hi Ayush,

I think the company supplies mainly to Africa. From my experience, debtor days of around 150-180 days is common in exports to these countries.

But, this also usually exposes companies to unexpected losses on debtor write-off. One needs to check the network the company has in Africa, as sales and collections both are dependent on that.



Dear Saurabh,

The Company has never incurred bad debts for so many years.

It has an extensive network of dealers in African countries.

Their anti malarial brand " Lonart " is popular enough at ground levels to prompt fakes to appear in the market. The Company has recently introduced sophisticated packaging with unique id for each strips sold with prominent mention of a local phone number where any dealer/consumer can send a local SMS and get an instant response from central server whether the strip is original or fake.

Discl.: I am invested in this Company since many years and my family has holding in the Company since IPO about 2 decades back.

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Hi Snehal Sir,

Good to know that you are invested with this company for so long. It will help clear my doubts which are given below

  1. If their product has good brand recall, why give such high credit periods? This seems to be a trend in companies supplying to Africa. It is usually driven by cheap export credit given to these guys.

  2. What is the concentration risk in Africa? That is a huge concern as African nations often have lot of political upheaval.



Hi Ayush,

I think the company supplies mainly to Africa. From my experience, debtor days of around 150-180 days is common in exports to these countries.

But, this also usually exposes companies to unexpected losses on debtor write-off. One needs to check the network the company has in Africa, as sales and collections both are dependent on that.



Dear Saurabh,

I attempt to answer your query as under:

High Debtors

The company sells its products in African countries through pharma wholesellers route. In this model, wholesellers import the product, employ an army of MR(s) locally to market these products and reach the ultimate consumers. Since small Indian Pharma companies cannot afford to have their front line of sales people in the small towns of these small countries, they have to depdend upon those wholesellers who have well established themselves in respective country.

**Importing pharma products in wholesale, redistributing them to a chain of semi wholesellers who in turn service a clutch of Medical stores/pharmacies in their area of operations involves extensive logistics costing time and money. **The invoice is raised by the company the day the goods leave their factory. The ultimate realisation of those shipments is preceeded by time involved in sea transport, customs clearances, stocking and distribution and redistribution logistics at the end of which , the drug would be on the selves of a medical store. **It is only when that drug is sold to the ultimate consumer, is the real realisation available for the original manufacturer.**I

Of course, each of the intermediary involved from wholeseller to redistributor to medical shop would be contributing to their share of working capital contribution. However, the bulk of the support for the working capital has to be provided for by the original exporter to the master importer of the country .

In this business, typically, stated credit period could be 120/135 days and real credit period by when the realisation may come to the exporter would be 150/180 days.

Fianlly, we must realise that if Bliss were to appropriate very healthy operating margins of 25% + , it has to support the marketing efforts of its importers by extending long credits. Key in the game is not the period of the credit but the ability of the exporter to identify the right importers and their right credit assessment so that the exporter is not saddled with bad debts.

It is here that Bliss has an inherent advantage of its promoter Mr.S.N.Kamath having started his early life in pharma field of Rwanda and over a period of more than 2 decades has acquired extensive intangible insight about various of these markets of Africa.

Today, I believe, the company has its people stationed in many of these African small countries. They monitor the market continuously for the changes in the dynamics at ground level and provide an intangible edge to the first mover advantage of the company in these markets.

Concentration Risk:

Yes, the company is overly depdendent on exports to Africa but Africa is a big continent with 52 countries. Presently, Bliss caters to the needs of about 12/15 countries. Those different countries inter se do provide some mitigant.

Plus, pharma is a life saving requirement. Affordable pharma is welcome across the globe, not only in Africa but also in America and Japan, the two biggest pharma markets of the world with highest non generic drug penetration. We should not forget that even after very healthy profits of Bliss, their drugs are far more cheaper in Africa than those of American and European MNC pharma companies.

I hope above clarifies doubts of many of the boarders on the company.

Discl.: As previously stated, I and my family are invested in this stock. Above is the summary of my understanding of the story of Bliss Gvs Pharma, in good faith. I may be wrong and may not have full or correct picture of the company on a continuous basis. Accordingly, I would request everyone to do appropriate due diligence on the company before committing any investment and not arrive at any hasty conclustions.


Snehal, thank you for sharing all you, appreciate, it helps a lot. I am curious if you have attended any AGM or any meeting with the management. Have you ever heard of any write offs from the wholesellers? I would agree, if they have run this way for a long time without any write offs, they would have developed a deep understanding of the market and people involved. My experience so far is, the investor relations dept doesn’t respond. They should try and be more communicative. This year AR is far more informative than the previous ones. And thank you again.

Dear Mahesh,

Yes, I have attended a couple of AGM(s).

In this context, I would like to point out: We, as investors, obviously have certain expectations on free flow of communication from Companies on our queries. Unfortunately,in India, not all Companies pass the Gold Standards.
There are times when we may have to go beyond certain quirks and limitations of management if the management has performed over more than a decade in creating investor wealth.

In this context, it is important to remember that Bliss has not raised any incremental funds from shareholders and still traversed the journey of scaling up the top line from 3 crores to 283 crores of top line of F.Y.12 and expected top line of 340 crores for current year of F.Y.13 with corresponding growth in bottom line from 29 lakhs to 53 crores…

This is all the more commendable in the context of their business being working capital intensive. In fact, the entire growth has beeen funded by retained earnings and internal accruals with negligible reliance on debt and zero reliance on capital markets.

Also, the company has given 40 % Bonus in F.Y.2005 and 60 % Bonus in F.Y.2009. Further, the Company has been increasing dividend on enhanced post bonus equity. Pre bonus, dividend was 10 %. Post 2 bonuses, the last dividend paid is 75 %.

Lastly, as you rightly point out, latest AR does give proper insight in to the Company as contrasted from the previous ones when there was hardly any information sharing.

Finally, I would like to share my investment philosophy:

In the world of investments, it is very difficult to get crystal clear picture before taking the plunge. An investor, like an entrepreneur, has to necessarily make big and vital decisions based on inadequate data/information. This is where the soft side of an entrepreneur or an investor comes to play the role. Sometimes, you win, sometimes, you lose. That is the name of the game and the nature of the beast. We, as investors have to have our goal post of achieving something what investing legend like WB has achieved. However, we should be happy even if we were to have significantly more hits than misses to begin with.


well said sir

Snehal do you know which subsidiary the contingent liability of Rs34 crores relates to ? Though it is a contingent liability, the sum is quite big and it is pertinent to know the subsidiary which took out the loan and why.

Snehal, thank you again. Couldn’t agree with you more on its past performance. Hope it continues to do good and evolves as a very efficient company. Good luck-Mahesh!

Q3/Fy-13 Results out…

Total Income up 28.4% to 81.85 Cr from 63.73 Cr.
EBIDTA Doubled to 24.68 Cr from 12 Cr. Butttttttt
Net Profit DOWN 4.7% to 9.39 Cr from 9.85 Cr.

EBIDTA margin is 30.2% v/s 35% (SQ-12) and 18.8% (DQ-11)
NET Profit margin is 11.5% v/s 23.6% (SQ-12) and 15.5% (DQ-11)

Total Raw material costs as a %ge to Income is 50.4% v/s 53.8% (SQ-12) and 64.3% (DQ-11)
Employee costs to Income is 3.5% v/s 2.2% (SQ-12) and 2.3% (DQ-11)
Other expenses to Income is 16% v/s 9% (SQ-12) and 14.6% (DQ-11)

Financial costs to EBIT is 9.3% v/s 3.7% (SQ-12) and 5.8% (DQ-11)
Tax Rate 61.2% v/s 30% (SQ-12) and 42.3% (DQ-11)

Almost doubling of Employee expense and 41% rise in other expenses couldn’t prevent EBIDTA from doubling as Almost zero rise in raw material costs helped margins.

Then, depreciation increased, Other income fell sharply, and financial costs increased from 69 lacs to 2.2 cr. Inspite of that PBT went up 42%.

Finally, provision for short taxation of earlier years resulted in doubling of tax incidence to 14.8 cr affecting net profits.

9M/Fy-13 v/s 9M/Fy-12:
Total Income up 28.6% to 251.05 Cr from 195.28 Cr (Fy/11-12: 266.68 Cr)
EBIDTA up 51.6% to 83.3 Cr from 54.93 Cr (Fy/11-12: 71.18 Cr)
Net Profit up 12.9% to 50.98 Cr from 45.16 Cr (Fy/11-12: 52.83 Cr)

Again, 2 times rise in financial and Tax expenses dented otherwise good results.

Reported 9-month EPS 49.94 v/s 4.38 (Fy/11-12: 5.12)

On 13/02/2013, stock on BSE closed at Rs. 36.25/- down 4.7%
(Results declared after market hours)

Thanks Deepak,

Considering this as a generally weaker quarter, decent results. They grew Topline and EBIT.

How can taxes bechoppy like this between quarters? Have they underpaid earlier or would they make lesser provisions in next quarter? The tax provision was about Rs 7.5 cr more than year earlier quarter. Very concerning development is finance cost of 2.2 cr, they were nearly debt free and they have cash reserves on book.Interestingly(may be it is good accounting?) they have not accounted abt Rs 9.5 cr Forex gain. I wonder if they do pricing adjustment depending on the season. I remember reading a clarification from company earlier that December quarter is week because of International holidays and year end.

Can someone who follows throw some light on taxes and increase in finance cost?

I suppose we should not attempt micro analysis to arrive at decisions on investments without keeping the original overall business model and track record of the Company at the back of the mind.

What has changed? Growth in top line continues. Decent Growth in bottom line also continues upto PBT level. PAT is affected by arrear provision of 7 crores. Still, bottom line and eps are also a shade higher.

As investor, should we be so critical of a performing Company for its back provision of Income Tax ?

In my perspective, the quality of the Company’s financials have improved and not deteriorated. It is far better to invest in a Company paying full taxes than the one paying very little taxes. Bliss has transited from a company paying hardly any taxes to a Company paying full taxes in last about 4 years. This should be sweet music to the investors.

Of course, due to this transition,the growth in year on year EPS figure has not been there. That has also affected the stock price appreciation. But below this entire facade, the Company"s inherent strength is increasing.

Of course, this is my understanding of the subject and I may be Totally Wrong. I do reserve the right to be wrong and request fellow boarders to do their Own due diligence before taking any Investment decisions.

Best Wishes to All !

Dear Snehal,couldn’tagree more, makes perfect sense. I didnt realise why taxes have gone up so much within 1-2 years. May be they were in SEZ or they hadexemption earlier. Will look for details. Having said that management has not done much to push their unique products in domestic or any other markets. The revenue contribution from so called unique products (which I think is a good market) continues to be marginalin spiteof their talk of positioning and pushing them. And there has been this talk of MHRA approval for a long while where the market for pessaries is huge, nothing has progresses so far. They were also supposed to build a capacity in middle east, no news about whats going on. They can be a little moretransparent andfocused.

I look forward for your thoughts since you have been a long term investor in this company.

Was researching on this and got following questions:

  1. Does anyone know break up of revenue per business segment? How much does anti-malarial contribute to overall revenue?

  2. IMO Today contraceptive can get bigger share in market overall due to known reasons - no artificial barrier etc. Incidentally, there is popular female contraceptive called as Today Sponge which uses same spermicide, but it needs to be removed after the act. But Bliss’s today does not - it dissolves on its own.

Continuing on above post…

Do they have any patent on today or any other product?

This is unverified info that I picked up from a employee in a local train in Mumbai. The Company is expanding their injectables capacity at their plant in Palghar. Africa continues to be their key market with Nigeria and Ghana being the larger ones. “Today” contraceptive - although their more popular product is not their best selling one. The top selling products are the anti malarial drugs and suppositories.

Could not get more info as it was a 5 minute conversation!!

Hi Pinto, I too spoke to one of the employee and its consistent with what you heard about injectibles capacity addition. I am trying to speak to the management, do you already own shares and would you be interested to talk to the management?

Hi Snehal and Mahesh,

This tax arrears of 7 Cr that you have mentioned, is it over or do they have more arrears coming-up?

Any idea on thesuppository market size? Does it have good growth potential in India and outside?

The above article mentions that the antimalarial market in Africa is in for some competition in the retail segment. There is also a mention of Bliss having an old plant which will not pass WHO standards for institutional segment sales. Has the plant expansion taken care of this as the com mentioned it will get into tender business aswell.

The com aquired 70% stake in

which is into creams, ointments and gels. May be the debt went up due to this.

This "today" brand seems to be anunder performer. If it was really good the sales would have pickedup by now. Don't know why the com still projects it as a USP.

Overall though the past nos are impressive I am unable to get a grip on the growth visibility for the longer term.