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Annual report highlights
Reduction in working capital aided cash generation in FY11 though partly offset by
use of cash to increase stake in Taro. Despite one of the highest RoIC, Sun
Pharma’s RoE remain depressed due to a large net cash position. Contingent
income tax liability reduced by c. 40% to Rs2.6bn. Board remuneration increased
materially due to addition of a member. Involvement of promoter’s son has further
increased with proposed appointment as non-executive director in Taro.
Growth leadership in domestic formulations
Sun Pharma continues to be one of the fastest growing Indian pharma companies in
the domestic formulations market. It also maintained its leadership in six chronic
therapy segments. Top ten brands contributed c. 15% to domestic revenues versus c.
20% last year. Sun Pharma’s dependence on top ten products is one of the lowest in
Indian pharma sector.
Taro addition boost’s US generics
Integration of Taro from Sept 2010 boosted the US generics segment for Sun Pharma
with full year impact coming in FY12. Apart from the US, Sun Pharma also expects to
grow strongly in branded generics in emerging markets. The company enhanced
forward covers to US$315m from US$175m in FY10.
Lower R&D as percentage of sales
A couple of factors have led to decline in Sun Pharma’s R&D spend as percentage of
sales over recent years. Lower R&D spend at Caraco (due to shut down) and Taro
(lower ANDA filings) and reclassification of Cranbury site expenses from R&D to
manufacturing have led to reduced R&D as % of sales.
Highest return ratios
With one of the highest profitability in the industry, Sun Pharma has one of highest
return ratios with RoIC over 30%. However, due to a large net cash position RoEs are
lower at c. 20%.
Reduction in contingent liability related to income tax dispute
Sun Pharma’s contingent liability related to ongoing dispute on income tax has reduced
by c. 40% to Rs2.6bn. The amount related to this dispute had been rising sharply over
recent years (especially FY07-10).
Increase in board remuneration
Board remuneration increased fastest (65% increase in FY11) in last five years due to
addition of Kal Sundaram. However, Sun Pharma’s board remuneration as percentage
of net profits remains one of lowest in the Indian pharma industry. Mr Aalok Shanghvi’s
(promoter’s son) involvement in the business has further increased with his proposed
appointment as Non-executive director of Taro pharma.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Annual report highlights
Reduction in working capital aided cash generation in FY11 though partly offset by
use of cash to increase stake in Taro. Despite one of the highest RoIC, Sun
Pharma’s RoE remain depressed due to a large net cash position. Contingent
income tax liability reduced by c. 40% to Rs2.6bn. Board remuneration increased
materially due to addition of a member. Involvement of promoter’s son has further
increased with proposed appointment as non-executive director in Taro.
Growth leadership in domestic formulations
Sun Pharma continues to be one of the fastest growing Indian pharma companies in
the domestic formulations market. It also maintained its leadership in six chronic
therapy segments. Top ten brands contributed c. 15% to domestic revenues versus c.
20% last year. Sun Pharma’s dependence on top ten products is one of the lowest in
Indian pharma sector.
Taro addition boost’s US generics
Integration of Taro from Sept 2010 boosted the US generics segment for Sun Pharma
with full year impact coming in FY12. Apart from the US, Sun Pharma also expects to
grow strongly in branded generics in emerging markets. The company enhanced
forward covers to US$315m from US$175m in FY10.
Lower R&D as percentage of sales
A couple of factors have led to decline in Sun Pharma’s R&D spend as percentage of
sales over recent years. Lower R&D spend at Caraco (due to shut down) and Taro
(lower ANDA filings) and reclassification of Cranbury site expenses from R&D to
manufacturing have led to reduced R&D as % of sales.
Highest return ratios
With one of the highest profitability in the industry, Sun Pharma has one of highest
return ratios with RoIC over 30%. However, due to a large net cash position RoEs are
lower at c. 20%.
Reduction in contingent liability related to income tax dispute
Sun Pharma’s contingent liability related to ongoing dispute on income tax has reduced
by c. 40% to Rs2.6bn. The amount related to this dispute had been rising sharply over
recent years (especially FY07-10).
Increase in board remuneration
Board remuneration increased fastest (65% increase in FY11) in last five years due to
addition of Kal Sundaram. However, Sun Pharma’s board remuneration as percentage
of net profits remains one of lowest in the Indian pharma industry. Mr Aalok Shanghvi’s
(promoter’s son) involvement in the business has further increased with his proposed
appointment as Non-executive director of Taro pharma.
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