hikal investor presentation june 2013

8/13/2019 Hikal Investor Presentation June 2013

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Investor Presentation

June 2013


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Safe Harbor

This presentation and the accompanying slides (the Presentation), which have been prepared by Hikal Limited (the

Company), have been prepared solely for information purposes and do not constitute any offer, recommendation orinvitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any

contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a

statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable,

but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on,

the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may

not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the

contents of, or any omission from, this Presentation is expressly excluded.

Certain matters discussed in this Presentation may contain statements regarding the Companys market opportunity and

business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are

not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are

difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and

of the economies of various international markets, the performance of the paper industry in India and world-wide,

competition, the companys ability to successfully implement its strategy, the Companys future levels of growth and

expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, theCompanys market preferences and its exposure to market risks, as well as other risks. The Companys actual results, levels

of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this

Presentation. The Company assumes no obligation to update any forward-looking information contained in this

Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not

adopted by the Company and the Company is not responsible for such third party statements and projections.

2 Hikal Limited


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Company Overview

Technology Driven Contract Manufacturing Company for

On-Patent Molecules

Off-Patent Molecules

Contract manufacturing of APIs, AIs Intermediates and Custom Synthesis

Only Company in India to provide Active APIs for Pharmaceuticals and Agrochemicals

Diversified Customer base in US, Europe, and Japan

Integrated manufacturing facilities approved by Leading Global Companies

First Responsible Care custom manufacturing Life Science Company in India

Just the right chemistry

Hikal Limited 3


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Industry Overview & Potential

Hikal An Overview

Pharmaceuticals

Crop Protection

Moving to the next level

Financial Highlights

Hikal Limited4

5

8

20

25

28

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Introduction


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Global Industry Potential

Expected growth of ~5 6% in the next 2 years

Key Growth Drivers

Prevalence of Diseases Worldwide

Rising per Capita Income

Pharmaceutical Industry

Expected growth of ~6- 8% in the next 2 years

Key Growth Drivers for Crop & Non-Crop Segments

Higher prices of the Agricultural Commodities

Consolidation within Industry

Rising Income & Demand in BRIC Countries for

increased productivity in farmlands

Crop Protection Industry

Market Size : US$ bn


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Outsourcing Market Growing in Size

Indian CRAMs Market

Global Outsourcing market is expected to grow at

12.6% CAGR

Indian CRAMS Sector is expected to double to

US$ 7.6 bn 2012; growth of 2x compared to 2010

Contract Manufacturing will register growth of

41.4%

Contract Research will register growth of 12.6%

Extent of Outsourcing across Value Chain


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CRAMs - Key Growth Drivers

Efficient R&D and Low Cost Manufacturing will drive Volumes & Margins

Increasing Generic Drug Utilization

Significant Patent Expiries in US

Drugs worth US$ 97 bn expected to

go off patent from 2011-15 in US

compared to USS$ 73 bn during2006-10 period

Growing focus of Government on

Healthcare Reforms and Cost

Reduction

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Hikal Locations

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Business Overview

Research & DevelopmentOffers Right Combination of

Capabilities, Quality

combined with significant

Cost Arbitrage

Full development & Scale up

Service to Innovator

Companies , Generic &

Biotech Companies

Crop ProtectionCustom Synthesis and

Contract Manufacturing of

Agrochemicals,

Intermediates and Specialty

Chemicals

Preferred Supplier to Top

Crop Protection Companies

PharmaceuticalsContract & Custom

Manufacturing

Generics

Human Health

Animal HealthTrack record with and

established relationships with

Innovators, mid size Pharma,

Biotech & Generic Companies

Leverage Strong Relationships to create Business Opportunities across Segments

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Hikal Limited 10

Present across the Value Chain

Expertise in Custom Synthesis and Contract Research, with capabilities scaling up from

Gram to Kilo and Ton level of Production

Lead molecule

identified

Launch

Expiry

Discovery research

Pre launchOn patent

growing

Off patent

mature

Off patent

Discovery Development Full scale Manufacturing

Research biology &

Chemistry

Pre-

ClincPh

I

Ph

II a

Ph

II bPh

III

Contract Research Contract Manufacturing

Hikal R&D Services Hikal Manufacturing Services


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from R&D to Commercial Manufacturing

Route ScoutingChemical Process

DevelopmentScale-up

Kilo Scale

production

cGMP/ non GMP

Chemical Process

DevelopmentScale-up

Non GMP

Campaign

Process

Validation

Commercial

Manufacturing

HIKAL R&D SERVICES

Technology Transfer

Regulatory

AffairsStability Studies

Analytical

Method

Validation

Analytical

Method Dev.

Customer Site

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Boards of Directors

Hikal Limited 12

Baba KalyaniJai Hiremath

Chairman & MDSameer Hiremath

President & Joint MD

Prakash Mehta

Dr. Wolfgang Welter

Sugandha Hiremath

Dr. Peter Pollak

Kannan Unni Shivkumar Kheny


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Management Team

More than 35 years of experience in Pharmaceutical and Chemical industry

Under his leadership, Hikal has become one of the leading Life Sciences company globally.

Past President of the Indian Chemical Council (ICC) and the Past Chairman of the Chemical Committee

of the Federation of Indian Chamber of Commerce and Industry (FICCI).

Mr. Jai Hiremath, Chairman & Managing Director

Mr. Sham Wahalekar

Sr. V P, Finance & Company Secretary

Dr. Peter Nightingale

President, Acoris Research

Mr. Ashok Anand

President, Pharmaceuticals

Mr. Satish Sohoni

Sr. V P, Crop Protection

Ms. Sulabha Sawant

Head HR & Administration

Mr. Anish Swadi

V P, Business Development

More than 16 years of experience in Plant Operations & Manufacturing at Hikal

Chemical Engineer from MIT, Pune and an MBA cum M.S. degree in Information Technology from

Boston University, USA

Mr. Sameer Hiremath, President & Joint Managing Director

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Management Team

Jai Hiremath

Chairman & MD

Sameer Hiremath

President & Joint MD

Satish Sohoni

Crop Protection

Ravi Khadabadi

Supply Chain

Sham Wahalekar

Finance

Anish Swadi

Bus. Dvlp.

Dr. V. Ekkundi

Bangalore R&D

Ashok Anand

Pharmaceuticals

Dr. P. Nightingale

Acoris

Sulabha Sawant

HR & Admin

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Scientific Advisory Board

He holds a D.Sc. from the University of Marseilles, France; Ph.D.

In Organic Chemistry from Pune University - National Chemical

Laboratory; and a Ph.D. from Michigan State University and Ohio

State University USA.

He is a National Research Professor, Eli Lilly Chair, School of

Chemistry at the University of Hyderabad and a Bhatnagar

Fellow.

Padma Shri in 2000 by the

President of India

Chevalier de la Lgion d'Honneur

Fellow of the Royal Society and a

member of the Scientific

Advisory Committee to the

Prime Minister of India

He is a Ph.D. from the University of Tokyo, is Professor Emeritus

of the Nagoya City University and an adjunct Professor of the

Graduate School of Environmental and Human Sciences, MeijoUniversity.

He is the Honorary President of the Japanese Society for Process

Chemistry.

Pharmaceutical Society of Japan

(PSJ)The Abbott Prize and the

Japanese Peptide Society Award

He is B.Sc. (Hons) in Chemistry from Loyola College, Madras, and

Ph.D. from the University of Madras. He is a postdoctoral Fellow

from Wayne State University, California Institute of Technology,

Pasadena and Zurich University, Switzerland.

He has held various positions as Head, Medicinal Chemistry, CibaResearch Center; Director, R&D of Searle India, among others.

Bhatnagar Prize in Chemistry and

Lifetime Research Award from

the Chemical

Research Society of India. Dr. K.

Nagarajan spearheads thescientific efforts at Hikal.

He is a Ph.D. in Chemistry from the Johann Wolfgang Goethe

University, Frankfurt am Main, where he is the Honorary

Professor of Chemistry.

Prof. Kleemann is the Chairman of the Board of Directors of

Protagen AG and a member of the Board of Directors of several

non-listed and listed biotech and fine chemical companies

Co-author of the standard

reference book, 'Pharmaceutical

Substances'.

Dr. Takayuki Shioiri

Dr. Goverdhan Mehta

Prof. Axel Kleemann

Prof. K Nagarajan

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State-of-Art Facilit ies

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Crop Protection Site Overview

Location : Taloja, Maharashtra

Products : Crop Protection AIs & Intermediates

Accreditations : ISO 9001, ISO 14001, OHSAS

18001 & ISO 17025 (GLP)

Manufactures Fungicides, Insecticides and

Intermediates.

The site manufactures on patent active

ingredients for innovator companies

Location : Mahad, Maharashtra

Products : Crop Protection AIs & Intermediates

Accreditations : ISO 9001, ISO 14001, OHSAS18001

Manufactures Intermediates

Audited frequently by several Fine Chemical and

Multinational Companies

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Research & Development

R & D Facilities at Pune & Bangalore

Supports clients with early life cycle of products :

Route Scouting

Small scale synthesis

Process Research

Kilo quantities

Scale up facilities

New product development

R&D Facility offers :

Troubleshooting support

Synthesis of Intermediates and APIs

Process Development

Optimization / Scale up in lab/kilo lab and

document support for commercialization

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Pharmaceuticals

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Pharmaceutical Business Profi le

Custom Manufacturing projects in

Intermediates and APIs for MultinationalCompanies

Manufacture of Animal health products

Worlds largest supplier of Gabapentin, API

for Neuropathic use

Focus in the CNS area

Growth driven by

Addition of New Customers in Existing &

Newer geographies

New Products in various stages of the

pipeline

Strong Customer Relationships

Large Global Generic & Innovator Cos.

Pharmaceuticals - Revenue

Hikal Limited 21

Rs. Million

Pharmaceuticals - PBIT

5Y CAGR : 15%

5Y CAGR : 19%


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Exist ing & Future Growth Drivers

Construction of newest multipurpose API plant capable of manufacturing 4 APIs

simultaneously is underway at US FDA facility in Bangalore.

Phase I Expected completion by end 2013

New Pilot Plant for early stage projects under construction at Bangalore Will add to

number of products in the pipeline

Panoli plant approved by US FDA - Second US FDA Manufacturing Site

Bangalore USFDA facility passed third Audit and received zero 483s (zero regulatorydeviances)

Audited and certified by Supply Chain Consortium Rx360

Leading Multinational Innovator, Biotech and Chemical Companies are members of

Rx360

The certification showcases regulatory and quality compliance Hikal Limited 22


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R & D Expertise

Contract Research & Development

Process research of APIs and intermediates involving multi-step complex synthesis

Strong Track Record of developing non-infringing commercially viable processes

Facilities ensuring seamless scale up from Lab to Commercialization

Dedicated Technology Transfer Group of chemists and process engineers

Dedicated R&D small & pilot scale production assets to ensure high throughput of molecules

ActivitiesAcoris Research

Pune

Bangalore R&D

Center

Bangalore

ManufacturingPanoli Taloja

Drug Discovery Support * *

Analytical method Development * * *

Process Research *

Process Development * * * *

Process Improvement * * * *

Kilogram Laboratories * * * *

Pilot Plants * * *

cGMP compliance * *

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R & D Expertise

Acoris (formerly a 100% subsidiary) Division of Hikal

Provides early stage support services to the Life Science industry

Customers : Multinational Companies from US, Western Europe and Japan

FY 2011-2012 : Completed multiple laboratory scale and major pilot plant development projects

Strong Project Pipeline

Projects range from Phase I to Phase III (Intermediates & Advanced Intermediates)

The success of these projects depends on Regulatory Approvals

A majority of these projects are from Repeat Customers

Research Molecules in various stages of Phase II & III - Building a pipeline for future

commercial supplies

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Crop Protection

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Crop Protection Business Profile

Custom Synthesis and Contract

manufacturing of Agrochemicals,

Intermediates and Specialty Chemicals

Worlds largest supplier of Thiabendazole

(TBZ)

Other products include

Growth driven by

Addition of multiple products to existing and

new customers

Long term Supply contracts in place

Volume & Margin Expansion

Strong Customer Relationships

Global Leading Agrochemical Companies

Hikal Limited 26

Crop Protection - Revenue

Crop Protection - PBIT

5Y CAGR: 12.8%

5Y CAGR: 10.7%

Rs. Million


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Exist ing & Future Growth Drivers

Made inroads in Japanese Market

Added new customers for commercial manufacturing starting 2013, the lab trials for these

molecules have been completed

Multiple Late Stage Research products for Japanese Companies should be commercialized in thenear future.

Growth Strategy

Increased capacity utilization at Mahad & Taloja commercial plants

Excellent track record of safety, health & environment with customers

Technology absorption and innovative process development

Animal Health & Specialty Chemicals Business seen as a potential growth driver

Current Portfolio o f contract manufacturing products w ith plans to launch several new

products in next few years

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Moving to the Next Level

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Ready for Growth

Geared to increase both Revenues & Profits

Major Investment

Completed

Consolidated Gross Fixed

Assets increased from

Rs. 508 Cr in FY08 to Rs.

1,042 Cr in FY13

Asset Creation

Acquired R&D Centre,

Bangalore in 2001 and

Set up Acoris Research in

200809

R&D Strength

absorption and creation

of new technologies

Green chemistry

initiatives

R & D

Strong Customer

Relationships with the

Leading Global

Companies

Multiple products from

Existing Customers

High Quantum of Repeat

business

Customer Relationships

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Financials

Hikal Limited 30
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Operational Highlights

Hikal Limited 31

Standalone Revenues Standalone EBITDA

5Y CAGR: 16.2% 5Y CAGR: 18.2%

Rs. Million

Consistent EBITDA Margins in range of 26 - 29 %

* Interest expenses includes exchange loss on PC FC


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Consolidated Profit & Loss

Rs. Million FY13 FY2012 FY2011 FY2010

Net Sales 6,604 7,078 5,023 5,390

Expenditure 4,763 5,245 3,830 3,677

EBITDA 1,841 1,833 1,193 1,713

Margin 27.9% 25.9% 23.8% 31.8%

Other Income 63 14 33 2

Depreciation 491 453 410 358

Finance Costs 598 664 437 380

Exchange Loss 484 219 32 547

Tax 78 51 -23 -70

Net Profit 253 460 370 500

Margin 3.8% 6.5% 7.4% 9.3%

Hikal Limited 32


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Consolidated Balance Sheet

Rs. Million 31-Mar-13 31-Mar-12

Shareholders Fund

Share capital 164 164

Reserves & Surplus 4,338 4,142

Non-current liabilities

Long Term Borrowings 2,196 2,457

Deferred Tax Liabilities 86 8

Long Term Provisions 97 70

Current liabilities

Short Term Borrowings 2,603 2,055

Trade Payables 1,129 1,145

Other Current Liabilities 1,297 1,277

Total Liabilities 11,910 11,318

Rs. Million 31-Mar-13 31-Mar-12

Non-current assets

Fixed assets 7,090 7,149

Long-term loans & advances 698 555

Non-current investments 31 31

Deffered Tax Assets 0 -

Current assets

Inventories 2,570 1,928

Trade receivables 846 1,020

Cash and bank balances 154 69

Short-term loans and advances 514 562

Other current assets 7 4

Total Assets 11,910 11,318

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Foreign Exchange Update

Direct Exports constitutes ~80% of the Sales and

Domestic Sales includes deemed exports

In past, majority was in US Dollars

Forex Losses on the back of long term

Options Contract in the past

Cumulatively booked Forex Losses of Rs 130 Cr

from FY2008 to FY2013

Revenue contribution from Exports

Now,

Diversified Currency Exposure to Euro, Rupees and US Dollars

Forex Risk Management Policy in place

Rs. Million

Hikal Limited 34


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Annual Dividend Payout

Hikal Limited 35

33% 22% 22% 18%22%Dividend

Payout16%

Rs . Per Share

0%

Dividend payout track record


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Certifications

3rd USFDA audit was completed successfully at Bangalore

Responsible Care certification First Indian Life Sciences company

First Indian Company to receive Rx-360 Certification

Audited successfully by the Korean FDA

Audited successfully by Therapeutic Goods Administration, Australia

Certified 9001 and 14001 for Mahad, Taloja, Panoli and Bangalore,

17025- GLP for Bangalore

Certified 18001 for Mahad, Taloja, Panoli and Bangalore

Hikal Limited 36


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Company : Investor Relations Advisors :

Hikal Limited

Mr. Sham V. Wahalekar

[email protected]

www.hikal.com

Strategic Growth Advisors Pvt. Ltd.

Mr. Gaurang Vasani / Ms. Payal Dave

[email protected] / [email protected]

www.sgapl.net

For further information, please contact:

Hikal Limited 37
mailto:[email protected]://www.hikal.com/http://www.sgapl.net/http://www.sgapl.net/http://www.sgapl.net/http://www.sgapl.net/http://www.sgapl.net/http://www.sgapl.net/http://www.hikal.com/mailto:[email protected]


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hikal investor presentation june 2013

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