Thanks Rashmee and Kiran for the clarifications:
1). Advances
The information I have is that Advances are mainly from 3 countries - Gautemela, Honduras and Guinea. Management is confident of sustaining Advance model here.
From what I have understood from you, Advances are given by retailers (pharmacies) to ensure they get the medicines at lower rates (from the company) than they would have received from local distributors. The company is able to supply in these countries perhaps because they have drug import licenses because of local ties.
This is good to have, but clearly this is not a scalable model (replicatable in most countries they operate in e.g., or new countries that they expand to).
Please comment/elaborate if you read any differently.
2). Future growth -Existing Business
If the existing business has to grow 20-25%, clearly this has to come mainly from expanding geographical presence. While expanding into new countries, they will have to go through the country distribution model, and will not enjoy the advantages they historically did.
I would go further to say that the Inventory and Debtors situation could change drastically.
Please comment.
3). Future Growth - Injectibles
As I understood from AR 2012, manufacture of Injectibles is intended for export to regulated****markets. Any idea on the status of plans forapproval of the plant andregistration of product lines with the regulatory authorities??
Looks to me any significant revenues from this segment is atleast 2 years away.
Please comment. If someone is familiar/studied the Injectibles space please educate on how competitive a space that is, what kind of margins apply, how difficult or easy will it be for a newcomer to garner market share from I assume existing, established players.
The positives are that it has opened up new revenue streams (Injectibles) mostly thru internal funding. It has halved Inventory and Debtor levels over last 5 years, and because of the current Advances situation, Working Capital requirements is at~1% from earlier 20%+ levels.
But if I project the future, I cannot be gung-ho that this rosy picture will continue. I rather anticipate deterioration on every front in the coming 2-3 years, if the company grows/wants to grow significantly i.e. 20-25% plus cagr basis.
So I am at a loss to understand the excitement in this counter:). What exactly is so exciting in this business? Look forward to be corrected/educated.
-Donald