Company’s credit rating report by care in September 2018 gave very elaborate details of company’s products and it’s facilities. Following are the key points.
The company’s major products are Metformin followed by Diloxanide Furoate, Norfloxacin amongst others. In FY18 (refers to the period April 1 to March 31), the top five drugs contributed around 90% of total sales resulting in product concentration risk.
The company’s customer base includes both domestic as well as international clients. The top 10 customers contributed 71% of total sales in FY18 leading to significant customer concentration risk.
The operations of the company are working capital intensive owing to the nature of the business, however, the adjusted operating cycle improved to 91 days in FY18 from 104 days in FY17 (excluding receivable/payable from/to irrecoverable customer being written off in FY18). The improvement is majorly on the back of improved inventory management.
In FY18, the net sales increased to Rs.96 crore from Rs.78 crore registering a growth of 23% on a y-o-y basis. The increase in sales is majorly contributed due to improved demand on account increased market penetration. In FY18, sale volumes of Metformin declined due to subdued demand in export market, however, the sales realization for Metformin increased due to higher raw material prices, consequentially leading to an improvement in scale of operations as compared to previous year. Thus, the company’s gross cash accruals improved on a y-o-y basis during the period under review.
The company has two manufacturing units located at Solapur in Maharashtra. The facilities are spread over an area of 22.50 acres with total annual capacity of around 5,800 MT, thus capable of handling large volumes. The Unit II plant is Good Manufacturing Practice (GMP) certified.
Being an API player, the company’s business is mainly order driven (spot sales) with no long term arrangements with its customers, thus, leading to lack of revenue visibility over medium-long term for the company.
The product portfolio of the company consists of more than 12 APIs and intermediates including Metformin, Diloxanide Furoate, Norfloxacin, Telmisartan, Amlodipine amongst others. The total installed capacity is 5,800 metric tonnes (MT) per annum for manufacturing of bulk drugs and intermediates with dedicated capacity for Metformin of 4,800 MT per annum, however. the same can be swapped with other products in case of requirement.
In FY18, 44% of total sales is through exports and balance 56% are contributed by domestic sales.
Sales is almost flat in last 3 quarter .
Mix or negative result.
Q3 result very promising.Request your considered comments sir |STANDALONE
|Net Sales| 38.45|28.39|28.31|30.25|
|Net Profit 2.32|1.03|2.19|-4.66|,
The sales growth was very impressive. Need to watch out for it’s sustainability.
New R& D centre opened by the company.
See the RPT attached here.
@harshitgoel, any idea on the rent paid for the CAR and other RPT.
Your opinion is welcome.
Managerial remuneration is the only material item in RPT. Car rent paid I could not understand what it is for but the total amount is Rs. 14.27 lac, which is very small considering the overall financials of the company.
On Managerial Remuneration
Total remuneration in FY19 was Rs. 1.88 cr as compared to Rs. 1.40 cr for FY18, increase of 34.5%. Though the remuneration is 25% of profits which is on higher side. But we have to understand that company has started giving profits as compared to losses for previous many years. So management taking a little extra for good performance is not a bad thing. Going forward we should expect that remuneration as a percentage of profits should come down.
Care credit rating report of June 2019. Company’s long term rating improved from BB to BB+ and Outlook revised from stable to positive. Short term ratings also improved from A4 to A4+.
In FY19, the net sales increased to Rs.138 crore from Rs.98 crore registering a growth of 42% on a y-o-y basis. The increase in sales is majorly contributed due to improved demand on account of increased market penetration. In FY19, sale volumes increased by 38% majorly attributed by increased demand for Metformin. Moreover, sales realization of Metformin (accounting for 44% of sales in FY19) improved by 16%.
In FY19, the company’s EBIDTA margin increased to 12.63% from 11.73% in previous year. This is mainly due to growth in sales volumes leading to better utilisation of fixed costs and improvement in sales realisation owing to improved demand for Metformin. PAT margin also improved significantly in FY19.
The company’s major products are Metformin followed by Diloxanide Furoate, Amlodipine, Telmisartan amongst others. In FY19 (refers to the period April 1 to March 31), the top five drugs contributed around 88% of total sales resulting in product concentration risk.
the customer concentration risk reduced in FY19 as reflected in top 10 customers contributing 59% of total sales in FY19 as against 71% in FY18, the same continues to be relatively higher.
Being an API player, the company’s business is mainly order driven (spot sales) with no long term arrangements with its customers, thus, leading to lack of revenue visibility over medium term for the company.
The adjusted operating cycle (excluding receivable/payable from/to irrecoverable customer being written off in FY18) improved to 71 days in FY19 from 91 days in FY18.
The tailwinds in the API space should push this company forward. Is anyone else tracking this?
The Q2 results have been positive too
Smruthi Organics Limited-09-14-2020.pdf (756.4 KB)
Credit rating report Sep’2020
Bonus issue and Quarterly Results08220453-c6b5-47f2-8e4a-fabeb5b87aa9.pdf (2.1 MB)
Detailed Analysis @harshitgoel !! Are you still following this one ?
Can you please share your views on current performance of the company ?
- Company has issued 2:1 bonus shares in January 2021
- Sales of Company have dipped
- Borrowings of the company are down 37% resulting in proportionate decrease in Interest cost
Thanks in advance.
Disclosure: Not invested, interested.
I am still following the company.
- Company had a good FY21 in terms of profitability. This has helped improve company’s Balance Sheet. They have reduced loan substantially and also have good cash in hand (Rs. 16cr).
- Despite being the best of times for the pharma sector, company has not been able to increase sales in the past two years. They have done very little on introducing any new products, they did launch one new API product Teneligliptin (anti – diabetes) in December 2020 quarter.
- Company has issued bonus shares to increase the capital base above Rs. 10 cr so that they can come out of PCAS (Periodic Call Auction Session) mechanism on BSE. It’s a good thing as it will increase liquidity and ease of trade.
Company has had a good runup in the past 2 years and the mcap has increased from 60-70 cr to 290 cr now. A lot of small pharma companies are giving good sales growth and doing good things on product and capacity front. Company has good Balance Sheet and looking forward to what they do in the future.