Poly Medicure AR 2019 notes
Company’s 2019 AR is a good read. After the proposed regulation on medical devices sector by the government, investors were skeptical about the profitability growth of medical devices company. Management on the contrary is quite optimistic in the annual report about the growth opportunity presented by various Govt. measures for medical device industry (Ayushman Bharat scheme, Natioanl Medical Device Promotion Council). Also 70% of sales of the company are from exports so any adverse effect, if any on medical devices manufactured by the company, will be limited to domestic sales only. Company is targeting to grow by both organically and through acquisitions (Did an acquisition in Italy during the year). In export market market company competes on price and in domestic market it competes on technology.
Notes from AR
- Company has been recognized as the “Indian Medical Devices Company of the Year 2018” by Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India on 18th February, 2019. Biggest recognition and Achievement since inception of the company. The award was conferred based on Company’s export performance, R&D efforts and New Product launches.
- Company has achieved net sales of Rs. 610.83 Crores as against the net sales of Rs. 521.68 Crores in the previous financial year, which has registered a growth of 17.08%. EBITDA has increased to
149.12 Crores as from135.96 Crores in the preceding year. Profit after tax of ` 65.40 crore. - Some of the key products are: • Short PIVC’s (Peripheral IV Cannula) • Mini MID Lines • MID Lines • CVC (Central Venous Catheters) • PICC (Peripherally Inserted Central Venous Catheters) • PICC Ports
- Top exporter of medical devices in past 6 years.
- A new manufacturing plant will come up in Mahindra SEZ, Jaipur by early next year.
- Turnover
Infusion Therapy Products: 68.60%
Blood Management: 11.48% - Remuneration of KMP is Rs. 8.75 cr.
- This year Company is introducing new products in VASCULAR ACCESS / INFUSION THERAPY.
- Approximately 70% of our total revenues come from exports.
Export Sales: 403.67 cr
Sales to Related foreign Subsidiaris: Rs. 23.35 cr
Domestic Sales: 163.97 cr
Forex Earned Rs. 387 cr (Rs. 344 cr in FY18)
Forex used Rs. 155 cr (Rs. 145 cr in FY18) - Capex of Rs. 49 cr.
- Borrowings on March 2019 at Rs. 160 cr ( Rs. 133 cr in FY18)
- Research and development expenses increased from
1004.78 lacs in fiscal 2018 to1014.90 lacs in fiscal 2019, primarily on account of increase in employee benefits expenses for research and development. As a percentage of total revenue, R&D expenses decreased from 1.87% in fiscal 2018 to 1.61 % in fiscal 2019. - Liquid assets (Cash, Bank and MF Investment) of Rs. 75 cr approx.
- The subsidiary companies performed as follows:
- Poly Medicure (Laiyang) Co. Ltd, China - The wholly owned subsidiary Company has achieved a turnover of
1,098.90 lacs for the year ending 31st March, 2019 against1,421.71 lacs in the previous year. The Performance during the year was impacted by low order book. - US Safety Syringes Co., LLC, USA – The Company has been shut down and dissolved on 10th June, 2019.
- Poly Medicure B.V., Amsterdam, Netherlands - During the year under review the Company has incorporated a 100% subsidiary company in Amsterdam, Netherlands in the name of Poly Medicure B.V. for global operations, further it will be used for expanding business organically and inorganically. Investment of Rs. 34.17 cr. Poly Medicure BV, Netherlands invested Rs. 3348.36 lacs in Plan 1 Health Italy,. Goodwill amounting to ` 2858.11 Lacs have been created on consolidation.
- Plan1 Health s.r.l., Italy, a step-down Subsidiary – During the year under review, the Company has acquired a 100% step-down subsidiary i.e. Plan 1 Health s.r.l., Italy.
- The Company has one Associate in Egypt, viz. Ultra for Medical Products Company (ULTRA MED), Egypt – The Associate has achieved sales of
7,532.73 lacs during the year end December 2018, against6,183.26 lacs in the previous year. Share of profit Rs. 1.39 cr ( Rs. 1.24 cr in FY18).
- Poly Medicure (Laiyang) Co. Ltd, China - The wholly owned subsidiary Company has achieved a turnover of
- Future growth opportunities
- Higher Medical Devices consumption expected in India due to implementation of Aayushman Bharat. This Universal Healthcare Insurance Scheme in India will be a big game changer for the Medical Devices industry.
- Higher Private Insurance penetration driving the consumption of medical devices
- Higher growth expected in Renal Care & Diagnostic industry
- National Medical Device Promotion Council - Under Ministry of Commerce & Industry, Department of Industry Policy & Promotion (DIPP): The setting-up of the Council will boost domestic manufacturing as it will act as a facilitating promotional & developmental body for the Indian Medical Devices Industry.
- The sector at present growing around 12-15% Compound Annual Growth Rate (“CAGR”). A significant percentage of purchasers of medical devices are private medical institutions and hospitals. Due to increased competition in Tier I cities, private enterprises have started to focus on Tier II and Tier III cities, a market which is until now untapped in India. As private enterprises expand in lesser explored markets, the demand for medical devices will expand proportionally.
Regards
Harshit
Disclosure: Tracking