Conference Call with IPCA Labs Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript. 

Call Participants: Mr. A K Jain - Joint Managing Director, Mr. Harish Kamath - Corporate Counsel & Company Secretary

Introductory remarks from A K Jain

Good afternoon! Thanks for taking out time and joining us for Q4FY20 and full year FY20 results conference call. I will briefly touch upon some of the key performance highlights and then we will open the floor for question answers. Q4 and FY20 have been strong for the company. 

• Standalone net profit income has gone up by around 20% to around Rs. 1018.09 crores and consolidated net income is up 22% at Rs. 1087.49 crores

• Indian formulations business in Q4 has gone up by around 21% at Rs 1,087.49 crores 

• Exports Income is up 18% at Rs.492.66 crores

• Standalone EBITDA margin is at 22.29% in Q4FY20 as against 21.2% in Q4 FY19

• Consolidated EBITDA margin is at 21.47% in Q4FY20 as against 20.09% Q4 FY19

• For full year FY20, Standalone net total income is up 20% at Rs.4432.12 crores

• Consolidated net total income is up 23% at Rs 4,715.71 crores for FY20

• Indian formulations overall income is up 16% at Rs. 1,912.61 crores for full year FY20

• Exports income for full year has been very strong in FY20, up 24% at Rs 2,143.75 crores

• Standalone EBITDA margin is at  22.41% in FY20 as against 20.75% in FY19

• Consolidated EBITDA margin is at 21.55% in FY20 as against 20.05% in FY19, up by 1.5% overall

• Overall, standalone net profit at Rs 652.46 crores, up 43% and consolidated net profit is at Rs 603.56 crores, up 36%

• If you look at the overall break-up, domestic business is around Rs 431 crore as against Rs 355.7 crore in last financial year

• Overall formulations business in Q4 is around Rs 713 crore against Rs 609.3 crore, up by 17%

• API has done well. It’s almost around Rs 275 crores as against Rs 211 crores, up by 30%

• If you look at standalone number for the whole financial year, domestic income is at Rs 1,912.6 crore as against Rs 1,646.83 crore in last financial year, up by around 16%

• Exports formulation is around Rs 1,222 crore as against Rs 1,048 crores and overall formulations business is around Rs 3,134 crores as against Rs 2,695 crore, up by around almost 16%

• API domestic business is up by around 24%, export business is up by 35% and overall API business we have done is around Rs 1,733 crore as against Rs 885 crore in last financial year. 

• Overall business numbers is around Rs 4,367 crore as against Rs 3,633 crore

• API business has accounted for almost around 26.86% to the overall turnover which was last year around 24.35%

• Standalone gross profit for the quarter and the financial year, the gross profit compared to last financial year, fourth quarter has gone down by 0.41% and for the whole of the financial year, it is down by around 1.96%.This is mainly because of increased input cost during the financial year and higher ratio of API business in the overall business pie. But there has been good improvement in the fourth quarter as against 1.16% EBITDA gross margin which was down in the whole of the financial year

• Overall, summing up the performance for FY20, I would like to say that our focus has been on improving productivity and utilization of assets and brand building 

• Asset turnover ratio has improved to 2.3% as against 2.04% in last financial year 

• If you look at our return on capital employed, has improved on standalone basis by almost 20.2% as against 16.31% in last financial year

• If you look at our consolidated return on investment, it is almost return on capital employed 19.63% as against 16.5% in the last financial year

• Overall, the inventory days is almost around 107 days in last financial year mainly because we were looking to reduce the inventory but finished goods inventory in the month of March has significantly moved up, because a lot of consignment which was meant to be exported, could not be done due to the lockdown situation. As a result of this, finished goods inventory has moved up.

• Our overall receivables in current financials in March 2020 around 7 days is against 64 days last year, largely because of the announcement of Janta Curfew. Domestic credit of the whole industry has increased by around 10-15 days. There were issues with the export receivables as well because most countries were facing the lockdown situation so remittances could not come, as a result of which overall export receivables moved up by 7 days.