A Company with strong fundamentals
World over, the SMEs have become silent drivers of economic development. The biggest challenge being faced by these enterprises is access to capital. The BSE SME and NSE Emerge are new source for SME IPOs and provide a listing opportunity to the SMEs with minimum compliances and cost compared to the main board. SMEs are spread across diverse sectors and are fast emerging as an alternate asset class for investors. For example, Valient Organic Ltd. was listed in October 2016 at Rs220 which zoomed to Rs1608 and is still trading at Rs1440. But not many IPOs on SME platforms provide an opportunity to the investors for a long term wealth creation.
From a long list of Companies eager to explore the SME platform, IE&M Team has selected this month Sudarshan Pharma Industries Ltd. (SPIL) which is expected to be listed soon. For the benefit of readers here is a brief analysis of the company.
Sudarshan Pharma Industries Ltd. is into Sourcing, Indenting, Product development & Supply of Specialty Chemicals, Bulk API, Intermediates & Pharmaceuticals. The Company has a product portfolio of more than 48 registered products comprising of pharmaceuticals, cosmetics and neutraceuticals. Presently the Company is supplying products in the form of capsules, tablets, oral syrup, dry syrup, liquid, and injections. Going forward they have plan to introduce OTC products in the segment of lifestyle diseases and food supplement. The Company is into contract manufacturing of various types of pharmaceutical products which are used as Neuro-Psychiatric drugs and other drugs that are used for the treatment of Pain management, Orthopedic treatment, Iron deficiency Anemia (IDA), Constipation, Erectile dysfunction, Respiratory Ailments (Anti Allergic & Bronco Dilatory Drugs). The FDFs also include various therapeutic segments like Anti-Infective, Anti-Ulcerant, Anti-Histamines, Antibiotics, Anti-Hypertensive, Vitamins & Iron Supplements etc.
Key Business Verticals:–
- Ethical marketing of branded and unbranded generics in the domestic pharmaceuticals market through its own distribution logistics network and field force in 5 States in the ethical pharma division named as “Vimac Healthcare”
- Contract manufacturing and supply of specialty chemicals, drugs intermediates and pharmaceutical formulations as per client’s specification. Indenting and sourcing of chemicals, bulk drugs and intermediates from domestic and overseas vendors and medicines for well-known pharmaceutical companies in India and institutional business
- Exports in pipeline for Formulations & API to non-regulated markets in Eurasia, Africa and South East Asia.
- The Company has also developed two new prescription drugs under NDDS (New Drug Delivery System) – Oral Disintegrating Strips as follows:-
- In today’s sedentary lifestyle the erectile dysfunction disease is very common, to address this lifestyle complications SPIL has entered with new drug delivery products like Love Bird – Tad 20 (new generation medicine Tadalafil 20 mg oral disintegrating strips which is latest generation of Sildenafil )
- LoveBird -Breath Freshner (Mint flavoured)
- Vomisun (Ondanestron 4 mg) for control of Vomiting.
- Innovative drug combination Kit for heart failure patient, which will help the patient to prolong the golden hours i.e. a window of opportunity that impacts a patient’s survival and quality of life following a heart attack with Brand name “Heartkit-LD” & “Heartkit-4”.
- Coming up with Love- Bird OTC division which includes “Love Bird Ayur” an Ayurvedic preparation for better sex life & other range of life style and personal hygiene products.
- The effective combination drug, brand ‘Setdown’offers dosage convenience (tablet form), non diabetogenic, no electrolyte imbalance and category B safe drug in pregnancy, having the market opportunity of Rs546 crore with 16.18% CAGR (2017 May MAT, AIOCD).
- The Ayurvedic proprietary product “Jivan KIT” is a first time in India, rejuvenating the critically ill patients and offering detoxification with anti oxidant Ayurvedic property.
Strong Exports Division
The Company is operating both in domestic and international markets. Presently, it is supplying Active Pharmaceutical Ingredients (APIs), Intermediates, Finished Dosage Formulations (FDFs) and Specialty Chemicals (SCs) in the domestic markets. Direct exports have started to countries like Uzbekistan, Bangladesh, Taiwan, Sultanate of Oman, (Muscat) Dubai, (UAE) & UK. Product pipeline is ready for export to countries like CIS, South East Asia, Middle East & North Africa (MENA Region) for future.
Reasons for Recommendation
The Company is an authorized distributor of Thailand based company Solvay Peroxythai, which has a unique product with brand name Oxy-Strong. It’s a kind of Specialty chemicals, a disinfectant Agent for water treatment solution. It is an international standard product and with this the Company will be able to increase its top line with good margin.
By 2022 the Company has a vision to achieve a top line growth of Rs500 crore. To achieve this the management has planned business expansion as follows:-
- To set up a dedicated manufacturing facility with high tech fully automated machines duly approved by WHO-GMP, Geneva-GMP & TGA-GMP
- To set up R&D center for Cardiac and Chronic diseases, Gyney, Gastrointestinal, Oncology & Thyroid disorder.
- Introduce Cardiac First Aid Kit, Heart Kit and New drug delivery systems (NDDS) for Bilayer technology in Doxofylline & Ambroxol, Fexofenadine, Montelukast, Mouth dissolving strips for Geriatric, neuropsychiatric and pediatric patients.
- Expand its footprint for finished formulations in the domestic market in 9 states.
- Develop key product portfolio into brands in 3 years and finally into OTC products
- Multi fold expansion of field force to meet the growing demand, duly supported by distribution logistics to ensure prompt after sales support and customer management.
Sudarshan Pharma Industries Ltd. (SPIL) is promoted and managed by technocrats belonging to a family with 33 years of rich experience in the ChemicaIs & Pharmaceuticals Industry (Sourcing, Indenting, Product development & Supply of Specialty Chemicals, Bulk API & Intermediates). In fact Hemal V Mehta started this chemical & API business in 1997 and later in 2002 his brothers Vasantrai Mehta, and Sachin V Mehta joined him to further strengthen the business. In the year 2008 they formed “ Sudarshan Speciality Chemsolve Private Ltd” & later in the year 2017 it was converted as a Public Limited Company by the name of “Sudarshan Pharma Industries Limited”.
Mr Hemal V. Mehta, Chairman and MD is a Chemical Engineer from Mumbai University and has 20 years of experience in Sourcing and Supply of Specialty chemicals, Intermediates, API, Bulk Drugs & entered into Pharmaceuticals branded generics in the last 3 years.
Mr Sachin V. Mehta, Jt. MD. has completed his Bachelors in Chemistry from Gujarat University and holds a diploma in Exports & Import Management. Since 2002 he has been involved in Sourcing of Specialty Chemicals, Intermediates & Basic Solvents from Korea, Taiwan, China and Japan. In 2006 under his leadership the Company developed new products of Specialty intermediates through Organic Research.