MOSL: ANNUAL REPORT THREADBARE (ART) | SUN PHARMACEUTICAL-Transaction unwinding allays investor concerns
ANNUAL REPORT THREADBARE (ART) | SUN PHARMACEUTICAL: Transaction unwinding allays investor concerns
Sun Pharmaceuticals’ (SUNP) FY19 annual report highlights the un-winding of transactions that had evoked investor concerns by (a) squaring-off of loans advanced to Atlas with outstanding provisions related to product sales amounting ~INR22.4b, and (b) transfer of domestic formulation (DF) generic distribution from promoter-owned Aditya Medisales Limited (AML) to its wholly-owned subsidiary. Sales to entities owned by KMP (primarily AML) stood at INR73.7b and receivables at INR6.1b. Operating cash flow post interest declined 49% to INR17.4b as cash conversion days rose to 303 days (FY18: 244 days). Increase in capex to INR31.6b (FY18: INR18.9b) due to milestone payments made for specialty products led to FCF turning negative to INR14.3b (FY18: INR15.4b). Thus, other intangible assets increased significantly to INR63.5b (FY18: INR56.1b). Goodwill remained high at INR58.5b (FY18: INR56.1b). Consol. revenue increased 10% to INR290.7b (FY18: INR264.2b) led by recovery in US sales (grew 22% to INR107b). Adjusting for exceptional loss, RoE, albeit low, improved 130bp to 9.1%, led by rise in NP margins. Contingent liability stood high at INR66.4b, 16% of NW due to income tax disputes (at INR58.9b).
- Atlas deal un-winded, balance sheet size shrinks: During FY18, SUNP extended loans to Atlas (~INR22.4b)as it could not adhere to the agreed supply schedule pursuant to the observations of the USFDA on the Halol plant. In FY19, the transaction was unwinded, which led to squaring off of loans advanced against provisions related to sales (of ~INR22.4b). Investments in non-core assets declined to INR86.6b, 21% of NW (FY18: INR97b, 26% of NW) as loans advanced to others decreased to INR3b from INR23.3b in FY18. Provisions in the B/S have reduced to ~INR27b from INR50b in FY18.
Sun Pharmaceutical and its subsidiaries are principally engaged in developing, manufacturing and marketing generic pharmaceutical products and bulk drugs. Co.'s products are mainly for the following therapy areas: psychiatrists, neurologists, gastroenterologists, diabetologists, chest physicians, consultant physicians, orthopedics, oncologists, gynecologists, ophthalmologists and cardiologists. Generic names of three principal products of Co. is Pentoxifyline, Pentoparzole Sodium, and Metformin Hydrochloride. Co.'s business can be divided into four segments: Indian branded generics, U.S. generics, international branded generics (ROW) and Active Pharmaceutical Ingredients (API).
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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