I am delighted to present our Annual Report for FY 202324, which
encapsulates the performance and strategic initiatives amid a challenging global
environment. Despite prevailing headwinds, NGL Fine-Chem has not only stayed on course
with the strategic plans, but has also delivered a commendable performance across various
fronts, even in a tough environment.
Dear Shareholders,
Embodying our annual report's theme for the year 'Grow. Expand.
Thrive.', at NGL Fine-Chem, we have pursued ambitious strategies to cement our leadership
in the veterinary API market. This year, we continued focussing on driving growth through
capacity expansions, product diversification, and strategic entries into high-growth
segments. By strengthening our core business and achieving self-reliance across the value
chain, we are poised to secure profitability and industry leadership.
I am delighted to present our Annual Report for FY 2023-24, which
encapsulates the performance and strategic initiatives amid a challenging global
environment. Despite prevailing headwinds, NGL Fine-Chem has not only stayed on course
with the strategic plans, but has also delivered a commendable performance across various
fronts, even in a tough environment.
How do you look back at FY 2023-24?
During FY 2023-24, we successfully enhanced our market share and
expanded our presence in the Animal Healthcare API market, driven by the increasing demand
for veterinary drugs. This growth was fuelled by factors such as the rising prevalence of
zoonotic diseases, expanding animal populations, and the humanisation of pets, which led
to heightened expenditure on animal healthcare.
While the global economy faced significant challenges, including
geopolitical tensions and inflationary pressures, the Indian economy demonstrated
resilience with robust investment activity and strong private consumption. Despite these
supportive domestic conditions, we encountered several significant challenges, including
subdued demand, high customer inventory levels, and currency volatility in key markets
such as Egypt, Pakistan, and Turkey. Initially, these factors constrained our performance
and created a competitive landscape marked by pricing pressures. However, as the year
progressed, these challenges gradually eased. The inventory destocking phase, which had
been a significant headwind, came to an end, leading to a notable recovery in demand,
particularly from the Asia region. This recovery was driven by robust volume growth even
as average realisations remained stable.
What is your view on the outlook for the animal healthcare industry?
The outlook for the animal healthcare industry is promising, driven by
increasing awareness and expenditure on animal health. We are witnessing a growing demand
for animal healthcare products, and the industry is poised for significant growth.
Our strategic positioning allows us to capitalise on these trends by
expanding our product offerings and reaching new territories.
Despite significant headwinds earlier in FY 2023-24, such as subdued
demand, high customer inventory levels, and currency volatility in key markets, we
observed a recovery in demand in the latter part of the year, particularly from the Asia
region. Additionally, a significant reduction in raw material costs helped us return to
normalised margin levels, contributing to an overall improvement in our financial
performance. Our focus on maintaining a diversified product portfolio and avoiding
excessive reliance on any single product, customer, or geography has been a cornerstone of
our resilience.
How would you mark the Company's performance amid the slower demand
scenario in H1 FY 2023-24?
Despite macroeconomic challenges, our financial performance has
demonstrated resilience. In FY 2023-24, our total revenues surged to ' 328.97 Crores.
Notably, our EBITDA reached ' 58.85 Crores, reflecting a 58.62% increase from the previous
year. Our Profit after Tax (PAT) doubled compared to FY 2022-23, reaching ' 34.50 Crores.
Our ongoing focus on optimising both operations and financial outcomes has enabled us to
adeptly respond to market fluctuations, ensuring sustained growth in the years ahead. The
gross margin for FY 2023-24 was approximately 53.2%, compared to 52.2% in FY 2022-23,
reflecting improved operational efficiencies and economies of scale.
What operational updates would you like to highlight?
Our commitment to providing value-driven solutions to our clients has
been a key factor in our success.
By prioritising the consistent delivery of high-quality products, we
have expanded our collaborations and strengthened our market presence. A significant
aspect of our operations is our focus on R&D, particularly in complex multi-step
organic synthesis for the manufacture of generic APIs and intermediates. This has enabled
us to maintain a diversified product portfolio, avoiding excessive reliance on any single
product, customer, or geography, which has been the cornerstone of our resilience.
We are significantly enhancing our production capacities by
commissioning new plants and pharmaceutical-grade clean rooms. This vertically integrated
approach, combined with the global shift to the China+1 supply strategy, is likely to help
shift the base to India, benefiting players like us in the animal healthcare industry.
Ongoing construction at our Tarapur facility is pivotal in expanding our manufacturing
capabilities. This increase in capacity, along with our innovative product portfolio,
positions us well to meet the rising demand for animal healthcare products.
If the demand recovery continues positively, we may explore outsourcing
some fine manufacturing to capitalise on growth opportunities. The recovery we have seen
is encouraging, and if it remains strong, we may outsource manufacturing until our new
facility becomes operational. Our CAPEX plan is progressing well and remains on track,
with the first phase expected to be completed by the end of FY 2024-25. Our focus will be
on gaining market share and growing our business while maintaining financial prudence and
sustainability.
How is the Company handling the regulatory challenges in international
markets?
Navigating regulatory challenges, particularly in markets like the US
and Europe, is a critical focus for us due to the varied regulations across regions.
In the US, the process involves preparing the plant, producing
validation batches, filing necessary documentation, and undergoing an inspection, which
typically takes 2-3 years. The European market, however, allows for a more expedited
process. Through strategic planning and execution, we ensure compliance with all
regulatory requirements, thereby facilitating our entry and growth in these vital markets.
How does the Company envision sustainability?
At NGL, our commitment to adapting to the evolving landscape of the
industry drives our pursuit of long-term, sustainable growth. Transitioning our
manufacturing plants to eco-friendly fuels marks a significant milestone in this journey.
We have phased out liquid fuels like furnace oil and solid fuels such as coal, embracing
sustainable alternatives like Compressed Natural Gas (CNG) and biomass briquettes derived
from agricultural waste. This strategic shift ensures that our operations solely rely on
clean fuels, significantly reducing our environmental footprint. Our proactive measures
champion a sustainable future, fostering a culture where prosperity is mutual among the
Company, its employees, communities, and the environment.
Can you elaborate on the Company's approach to Corporate Social
Responsibility (CSR) and community impact?
At NGL Fine-Chem, we embrace Corporate Social Responsibility (CSR)
initiatives with the aim to create a positive societal impact. We are committed to
investing in our communities and fostering sustainable growth. Our CSR efforts are
focussed on various aspects including environmental sustainability, education, and
healthcare.
Additionally, investing in a highly skilled workforce and fostering a
culture of innovation within our organisation ensures that we not only deliver superior
products but also contribute to the wellbeing and development of our society.
I would like to sign off by extending my most sincere appreciation to
our esteemed stakeholders, distinguished Board members, diligent team, and our valued
clientele. Your persistent trust and enduring support constitute the cornerstone of our
success. As we embark upon another promising year, I am confident that together, we will
continue to create a significant impact, playing a pivotal role in advancing prosperity.
With your ongoing support, we will leverage our strengths, pursue sustainable growth,
reach significant milestones, and continue to accelerate our momentum.
Warm Regards,
Rahul Nachane
Managing Director