NGL Fine Chem Ltd

Summary

A Business Analysis

About NGL Fine

NGL Fine-Chem Limited ('NGL' or 'We' or ‘the Company’) is a prominent Animal Health company in India with a global footprint. The company is one of the leading manufacturers and exporters of human and veterinary Active Pharmaceutical Ingredients (APIs), advanced intermediates and finished dosage forms.

For them, at NGL, quality and customer-centricity form the fundamental base of all their functions. The company have built a robust and resilient organisation on the strong footing of an exceptional quality manufacturing base and an impressive track record of service and reliability.

The company have three state-of-the-art production facilities in Maharashtra – two in Tarapur and the third in Navi Mumbai. With modern equipment, these facilities rigorously conform to all regulatory requirements. The company's distinctive product portfolio is pillared upon their potential to innovate, strong R&D capabilities and technologically advanced manufacturing facilities. These enable them to cater to the diverse needs of their customers globally and help strengthen the NGL brand.

Journey So Far

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A Leading Animal Health Company

Company's robust R&D and innovations

Company's Product Wise Revenue - FY22

Geographic Wise Revenue - FY22

NGL Fine's Quick Updates

50% market share in top three products

50+ presence across countries

400+ clientele base

Business Overview

NGL Fine-Chem Limited is a pharmaceutical and intermediates manufacturer specialising in veterinary and human health. The Company produces veterinary pharmaceutical raw materials, which are mostly utilised in the animal health business. APIs and intermediates are produced by the Company for use in veterinary and human health. Incorporated in 1981, by Mr Narayan Lawande, NGL Fine-Chem Limited sells a variety of items that cater to farm animal, and has successfully made inroads in addressing markets in over 45 countries.

With its excellent quality and value-added goods, the Company has a strong and increasing worldwide presence in Latin America, Asia, and Europe. The majority of the Company’s products are aimed at the Livestock industry, which accounts for around 65% of the global market for animal APIs and intermediates.

The Company focuses on cost-effectiveness while maintaining the highest level of product quality. NGL is now a wellknown Company with solid client ties with more than 400 customers in more than 45 countries. With the long-term strategic aim to become a worldwide player in the Animal Health APIs market, NGL continues to expand goods and customers in many different markets of the world. 

Product wise performance

The veterinary API sector accounts for a significant amount of the Company’s revenue. This section produces more than 20 APIs. These compounds are found in ecto parasiticides, anthelmintics, growth nutrients, and endo parasiticides, among other treatment categories. NGL also produces three APIs for human health that are utilised in the treatment of diarrhoea, angina, and malaria.

Leadership in Veterinary API Segment

• Strong controls of processes with 95% in-house manufacturing and backward integrated facilities leading to cost competitiveness
• High quality and reliable products with no market rejection in 15 years
• Market share ranging from 15% to 50%+in key products 
• Suppliers to 5 of top 10global animal healthcare companies

Customer & Product Concentration (Of Sales FY23)

Company's Manufacturing Facility

The Company’s facilities are outfitted with cutting-edge technology, allowing us to supply a diverse range of goods. With the production facilities of the Company located in cities of Navi Mumbai and Tarapur of Maharashtra, the Company has the ability to produce 600 tonnes of APIs. There are 194 m3 of stainless-steel reactors, 12 m3 of gasinduction reactors, and 102 m3 of glass-lined reactors on the factory’s 10,800 m2 of land.

Capacity-utilisation levels were maintained at 90% on average for the full year as of 31st March, 2022, with limited room for expansion. The Company has completed the expansion at the subsidiary – Macrotech Polychem Private Limited and has commission the plant in December 2022. Over the period of three years, the Company expects to complete a capital expenditure of around  ` 100 Crores.

Upcoming Expansion Plans

Brownfiled Expansion

Completed expansion in subsidiary Macrotech

Additional capacities of intermediates

Commercial production started

Green Expansion At Tarapur

50% capacity expansion with sufficient capacity to meet demand for new products in pipeline

Estimated capex of ₹ 140 Cr to be funded through debt and internal accrual

Civil construction undergoing. Invested ₹ 26.31 crores during FY23

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Industry Analysis

Indian Pharmaceutical Industry

India plays a significant role in the Global Pharmaceutical Industry. The Indian Pharmaceutical industry (IPI) is ranked 3rd in the world in terms of volume and 14th in terms of value. APIs, formulations, and speciality chemicals make up the Indian Pharmaceutical sector. Under distinct therapeutic divisions, these sectors are further subdivided into Branded and Generics. In FY 2020-21, India’s domestic Pharmaceutical industry was valued at US$ 42 Billion, and it is expected to grow to US$ 65 Billion by FY 202324, and then to US$ 120 Billion by FY 2029-30. It is also likely to increase three-fold in the next decade according to the Indian Economic Survey 2021. The Pharmaceutical industry expanded by 9-11% in FY 2021-22, owing mostly to a boost from emerging and domestic markets. In January 2022, the Indian Pharmaceutical market grew by 13.9% in terms of overall turnover. By demonstrating strength and commitment in the face of the pandemic’s disruption, the Pharmaceutical sector not only demonstrated its capacity to deliver appropriate medications, but also greatly contributed to other areas such as sanitation, preventative healthcare, and quarantine facilities.

India’s pharmaceutical exports are booming due to its significant presence in the Generic space. The Indian pharmaceutical exports totalled US$ 22.21 Billion in FY 2021-22 as compared to US$ 24.44 Billion in the previous year. Increase in freight charges and a drop in shipments to the United States which was caused by price erosion in the United States for some of the items were some of the reasons for the decline. On the other hand, the Indian Pharmaceutical industry supplies more than 50% worldwide demand for vaccines, 40% of Generic demand in the United States, and 25% of all pharmaceuticals in the United Kingdom. India’s pharmaceutical and medicine exports totalled US$ 24.44 Billion in FY 2020-21 and US$ 22.2 Billion from April 2021 to February 2022.

North America was India’s largest pharma export market in FY 2020-21, with a 34% share, while shipments to the US, Canada, and Mexico grew by 12.6%, 30%, and 21.4%, respectively. India is the world’s 12th largest exporter of medical goods. The Pharmaceutical industry accounts for 6.6% of the country’s overall goods exports. In FY 2019-20, Indian pharmaceutical exports were US$ 16.28 Billion, comprising bulk medications, intermediates, drug formulations, biologicals, AYUSH & herbal goods, and surgical items. According to a research, India’s formulation increased by 18% and bulk medication exports increased by 9% YoY in the first half of FY 2020-21. 

The Government has taken a number of initiatives to cut expenditures and lower healthcare prices. With the total financial outlay of ` 500 Crores for a period of five years starting FY 2022-26, the Department issued several guidelines on 11th March, 2022 for the scheme ‘Strengthening of Pharmaceutical Industry’ (SPI). The Union Cabinet has approved a change to the existing Foreign Direct Investment (FDI) policy in the Pharmaceutical industry, allowing FDI up to 100% through the automatic route for medical device manufacture under specific conditions.

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Opportunity Ahead

Increase in Opportunities due to patent cliff

Due to patent expiration in the next 4-5 years, it is projected that Indian pharmaceutical businesses would have an opportunity to grow by roughly US$ 5-6 Billion. When a patent expires, generic medications might enter the market and broaden product offers. Many Indian pharmaceutical businesses are already working on generic versions of copyrighted medications in order to take advantage of the future opportunity. Patented items worth around US$ 240 Billion are scheduled to fall off-patent over the next 4-5 years, till CY 2026.

Increasing FDI Investments

The worldwide spotlight has returned to India’s Pharmaceutical sector as a result of the COVID-19 crisis. In comparison to the previous year, FDI in the Pharmaceutical industry increased by 200% in FY 2020-21. FDI inflows were strong in FY 2021-22 (April-September), at ` 4,413 Crores, an increase of 53% over the same period in FY 2020-21. The unprecedented increase in foreign investments in the Pharmaceutical industry is mostly due to rising demands of COVID-19-related medicinal and vaccination requirements. 

Increase in Government Spendings

There has been increase in Government spending over the years. A total outlay of ` 219.40 Billion was made in two tranches of ` 69.40 Billion in 2020, & ` 150 Billion in 2022, for the pharmaceutical PLI plan in 13 important sectors, including active pharmaceutical ingredients, drug intermediaries, and critical starting materials, over the course of five years.

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Management Of The Company

Shareholding Pattern

Financial Performance

Operational Metrics

Profit and Loss

Balance Sheet

Cashflow Statement

Margins

Risk Factors

• Higher commodity prices
• Global economic slowdown
• High RM cost of inventory
• Higher inflation