#1 The Issue
Windlas Biotech Limited will be raising funds through initial public offering through fresh issue aggregating up to 165.0 Crore (The “Fresh Issue”) and offer for sale comprising up to 1,136,000 equity shares of face value of Rs. 5 each. (“Equity Shares”) from selling shareholders
The proceeds from the issue is proposed to be utilise towards (a) Purchase of equipment required for (i) capacity expansion of our existing facility at Dehradun Plant – IV; and (ii) addition of injectables dosage capability at our existing facility at Dehradun Plant-II; (b) Funding incremental working capital requirements of our Company; (c) Repayment/prepayment of certain of our borrowings; and (d) General corporate purposes.
#2 About the Company
Windlas Biotech Limited is amongst the top five players in the domestic pharmaceutical formulation contract development and manufacturing organisations (“CDMO”) industry in India in terms of revenue (Source: CRISIL Report). The company has two decades of experience in manufacturing both solid and liquid pharmaceuticals dosage forms and significant experience in providing specialized capabilities, including high potency, controlled substances and low solubility.
#3 Services Offered: The Company provide a comprehensive range of CDMO services ranging from product discovery, product development, licensing and commercial manufacturing of generic products, including complex generics, in compliance with current Good Manufacturing Practices (“GMP”) with a focus on improved safety, efficacy and cost. In addition to providing services and products in the CDMO market, Company also sells its own branded products in the trade generics and OTC markets as well as export generic products to several countries.
#4 Business Verticals: The Company has three distinct strategic business verticals (“SBVs”) such as (i) CDMO Services and Products; (ii) Domestic Trade Generics and over-the-counter (“OTC”) Brands; and (iii) Exports.
#5 Business Vertical Mix: In fiscal 2021, CDMO Services and Products SBV accounted for 84.66% of total revenue from operations. Revenues from CDMO Services and Products SBV increased at a CAGR of 18.63% from Rs. 257.26 Crore in fiscal 2019 to Rs. 362.03 Crore in Fiscal 2021.
#6 Product Portfolio: Company’s complex generic products portfolio primarily comprises fixed dosage chewable or dispersible. Complex Generic products portfolio constitute 69.44% in Fiscal 2019 and was 68.48% in Fiscal 2021 of our total product portfolio.
#7 Domestic product Mix: Company’s Domestic Trade Generics and OTC Brands SBV consists of (i) Trade generic products; and (ii) OTC brands. Domestic Trade Generics and OTC Brands SBV accounted for 10.22% of our total revenue from operations in fiscal 2021. Company’s Domestic Trade Generics and OTC Brands SBV has grown at a CAGR of 26.86% from Rs. 27.17 Crore in Fiscal 2019 to Rs. 43.72 Crore in Fiscal 2021.
#8 Foreign Product Mix: Exports SBV is engaged in identifying high growth markets and opportunities in semi-regulated international markets as well as selected regulated markets, for developing and registering product applications to obtain marketing authorizations for generic medicines and health supplements and subsequently, sell such products to pharmaceutical companies and pharmacies in the respective markets. In Fiscal 2021, Exports SBV accounted for 4.45% of our total revenue from operations. Revenues from Export SBV increased at a CAGR of 2.09% from Rs. 182.25 million in Fiscal 2019 to Rs. 189.95 million in Fiscal 2021.
#9 Manufacturing Facilities: Company owns and operate four manufacturing facilities located at Dehradun in Uttarakhand. As of March 31, 2021, its manufacturing facilities had an aggregate installed operating capacity of 7,063.83 million tablets / capsules, 54.46 million pouch / sachet and 61.08 million liquid bottles. In addition, it has recently received a license to manufacture certain APIs at our Dehradun Plant – I assisting company with backward integration
#10 Market Shares: In Fiscal 2020, Company’s market share was approximately 1.5 in terms of revenue in the domestic formulations CDMO industry (Source: CRISIL Report).
#11 Customer Mix: Revenue generated from sales to our top 10 customers represented 57.01%, 57.14% and 57.87% of our revenue from operations in Fiscals 2019, 2020 and 2021 respectively. The number of domestic CDMO customers that company has catered to have increased from 97 in Fiscal 2019 to 204 in Fiscal 2021. In Fiscal 2020, we provided CDMO services to seven of the top 10 Indian formulations pharmaceutical companies (Source: CRISIL Report).
#12 Sustained financial performance: The Company has a sustain growth performance in terms of revenues and profitability.
- Despite of the operating restrictions / lockdown imposed on account of the COVID-19 pandemic, company’s revenue from operations increased by 30.03% from Rs. 328.85 Crore in fiscal 2020 to Rs. 427.60 Crore in fiscal 2021.
- EBITDA also increased by 60.35% from Rs.34.00 Crore in fiscal 2020 to R. 54.52 Crore in fiscal 2021.
- PAT margin (i.e. profit for the period/ year before exceptional items divided by revenue from operations) from 4.65% in fiscal 2019 to 8.70% in fiscal 2021, on account of cost rationalization strategies, increased focus on complex generic products in the chronic therapeutic category.
- The Company received [ICRA]A (Stable) and [ICRA]A1 rating from ICRA.
- As of March 31, 2021, our Total Debt/ Equity ratio was 0.16, and ROCE was 20.23%.
#13 Industry Outlook: The global formulations outsourcing market is expected to reach US$ 28 billion to US$ 32 billion by 2025 owing to robust growth in the outsourcing segment aided by many large pharmaceutical players outsourcing their research and manufacturing to specialized contract manufacturing players. In particular, the domestic formulations.
- CDMO is projected to grow at a CAGR of approximately 14% while domestic formulations segment is expected to grow at a CAGR of approximately 11% between Fiscal 2020 and Fiscal 2025.
- In fiscal 2020, 31% to 33% of the total domestic formulations market was catered by CDMOs, which is anticipated to grow to Rs. 370 billion to Rs. 410 billion in terms of value by Fiscal 2025.
- The domestic injectable CDMO industry is expected to grow at a CAGR of 11.5% to 12.5% between Fiscal 2020 to Fiscal 2025 on account of growth in chronic therapeutic areas, such as, anti-diabetic and oncology, and strong demand from outsourcing for these therapeutic segments by the large pharmaceutical companies.
- The domestic injectable CDMO industry is expected to reach Rs. 49 billion to Rs. 53 billion by Fiscal 2025. Moreover, the injectable segment is expected to account for 12% to 13% of all the dosage forms in the domestic formulations market and 13.2% to 14.2% of the domestic formulations CDMO market (dosage-wise) in Fiscal 2025.
#14 Growth Strategy: The Company intends to utilize our R&D efforts to target select products which are currently under patent protection. Patents in relation to approximately 150 key products are likely to expire by Fiscal 2026 and are expected to offer a significant growth opportunity to CDMO in India (Source: CRISIL Report).
#15 Distribution Channel: The Company’s distribution channel, which involves directly working with over 703 stockists and distributors, as of March 31, 2021, which has grown from over 618 stockists and distributors, as of March 31, 2019. Growth in stockists and distributors has assisted company to penetrate into the relatively smaller towns and villages in the semi-urban and rural parts of India.