Zota Health Care LImited has informed the Exchange regarding Corrigendum to Investor Presentation
Lzoto'
healthcare ltd.
)uly 1.2, 2019
To, The Manager Listing Department, The National Stock Exchange of lndia [imited Exchange Plaza,
Ba ndra Kurla Complex, Bandra (E), Mumbai - 400051
Dear 5ir/N4adam,
Trading Symbol: ZOTA
Sub: Corrigendum to lnvestor presentation dated July 10,2019
Ref.: lnvestor presentation dated July 10, 2019 submitted vide NEAps App, No.2oLglrul/z253lz3lr with reference to the captioned subject and further to our latter dated July ro,2org, in respect of Investor Presentation Jury 2019; we wourd rike to state that there was minor typographical misiake on slide number 14 of the aforementioned lnvestor Presentation, accordingly we are iubmitting herewith corriBendum to the lnvestor presentation July, 2019.
The revised rnvestor presentation July, 2019 is encrosed herewith for your ready reference.
Thanking you,
Yours faithfully,
For Zota Health Care Limited
Ashvin Variya (Company iecretary & Compliance Officer) Place: Surat
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Registered office : Zoto House, 7a96, Hiro Modi Street, Sogrompurq, Surot - 395 OO2 | Ph: +91 261 2331601 Emoil: info@zotoheolthcare.com Web : wwryzotoheo thcore.com
Plont :
Ph: +9'i 261 2397122 ..'
CIN : L242llGJ2OOOPLCO38]52
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ZOTA HEALTH CARE LIMITED Investor Presentation July 2019
Disclaimer
This presentation has been prepared by the Zota Health Care Limited (the “Company”) only for information purpose to the stakeholders and does not contain any offer or invitation to subscribe the securities of the Company. No offering of securities shall be made except by means of offer documents.
This presentation has been prepared on the basis of information and data available with the Company consider reliable. This presentation may not contain all the information that you may consider material. Any liability in respect of the content of or any omission from this presentation is expressly excluded. Stakeholders are advice to compare the data provided in the presentation with the full financial results available on the website of the Company as well as on website of NSE Emerge.
This presentation contains “forward looking statement”, including “future oriented financial information” and “financial outlook”. This forward looking statement is based on management’s current expectations and belief, and subject to uncertainty. Actual result may be vary from the material facts contained in this presentation due to changes in government policies, regulations, economics reforms, natural calamities, competition, technology, etc. Company is not under obligation to inform any update or alter in forward looking statement, whether as a result of any new information or future events
2
Business Overview
Our Journey
Industry Overview
Zota’s Business Model
Davaindia at a Glance
4-7
8-9
10-18
19-24
25-28
Key Management Profile
29-31
Financial Metrics
32-35
Table of Content
Business Overview Business Overview
Incorporated in 2000, Zota Health care Ltd (ZHL) develops, manufactures and markets Generic, Ayurvedic, Nutraceuticals and Over the Counter (OTC) Pharmaceutical products • • • As on FY19 ZHL achieved a turnover of ₹ 8,717 lacs registering a growth of 10.8% YoY and PAT of ₹ 555.2 lacs
Focused segments bifurcated in to Domestic, Exports and Retail Pharmacy chain which operates across national and international boundaries Promoters and senior management have over two decades of experience in the pharma domain
Davaindia Key facts and figures
Customers served as on date
Davaindia stores
Davaindia SKU’S
Average wallet spends
Pvt. Label Brands
~7.92 Lakhs
143
1250 units
~ ₹123
95%
BRANDED
4
Our Philosophy
OUR VISION
OUR MISSION
OUR VALUES
-
-
-
Our vision is to become a global Health Care organization driven by people, research and technology and to be recognized as domestic and internationally integrated Health care and pharmaceutical company through Innovation, Quality and Competence.
Our mission is to become a globally acclaimed pharmaceutical company through development and introduction of wide portfolio of Pharmaceutical Formulations along with Nutraceutical as well as Ayurvedic products in key global pharmaceutical markets.
Innovate And Excel: Our strength lies in its workforce. We encourage our employees to always strive for innovation and excel beyond the norm. At Zota, every working opportunity comes with passion, dedication and zeal to excel.
Integrity And Transparency: At Zota, we are fully committed to adhering to principles of transparency while conducting business and upholding every transaction with the highest level of integrity so as to garner trust from our stakeholders.
Quality And Safety : Being a healthcare company, quality is the central focus in all our manufacturing processes. Conducive to achieve quality, we also provide a safe working environment and maintain adequate policies to achieve the level of quality we desire.
5
Zota Health care at a Glance
1050+
22+
143+
DOMESTIC DISTRIBUTORS
EXPORTING TO COUNTRIES
DAVAINDIA STORES
360+
TEAM STRENGTH
3000+
PRODUCTS
1250+
68%
DAVAINDIA PRODUCTS
PROMOTER HOLDING
22%
SEZ UNIT CAPACITY UTILIZATION
₹
18%
9%
5 YEAR REVENUE CAGR
5 YEAR PAT CAGR
6
Zota Health care’s Strength
01
Well- experienced promoters and management in the similar industry
03
Strong Profit 11% CAGR years (FY15-19) , 5 yr Avg Profit Margin at 7.8 %
Zero debt
02
05
Diversified product portfolio with presence in different therapeutic segments
Funding support from promoters in the past through equity infusion
06
Healthy Return Profile over the last 5 years
04
07
09
Diversified geographical footprints
WHO,GMP, GLP certified manufacturing facilities
Differentiated business model
08
7
Our Journey
Our Journey
Acquired all brand names of Sayona Medicare Pvt. Ltd. through MOU
Export oriented speciality manufacturing unit was inaugurated in Surat SEZ
Acquired trade mark, brand names of Vision and Redix Lifecare
Got listed on the NSE emerge platform through and Initial Public Offering
Crossed the benchmark of 10 crore+ export sales
Opened 143 Davaindia till date
2000
2007
2011
2014
2017
2019
2004
2010
2013
2017
2018
2019
Incorporated as a private company
Acquired trademark and brand name of Mexon Healthcare Ltd. Including its two divisions i.e. Healthpark Laboratories & Aaron Biotech
Expanded its business beyond the India, and started dealing in African countries
Received Kenya (PPB) regulatory and Sri Lanka (CDDA) regulatory approval for Surat SEZ plant
Launched in October 2017 with 4 stores of Davaindia
On 26th January, 2019, we have opened 26 Davaindia stores in a single day
9
Industry Overview
Generic v/s Branded
₹
GENERIC
COSTS
According to the World Health Organization, if doctor started prescribing generic medicines, then health expenditure can be reduced by 70% in developed countries and developing countries
₹₹₹
BRANDED
Safe
Effective
High-Quality
Active Ingredient
Performance
Strength
Dosage Form
Quality Standards
COSTS
11
Pharma Sector in India
Bulk Drug / API
Formulations (Manufacture)
Domestic
Exports
Patented Drugs
Branded Drugs
Generics
Generics
12
Indian Pharmaceutical Industry
21
19
17
15
13
11
9
7
5
25
20
15
10
5
0
14.59
15.53
6.4
16.41
5.7
8.9
17.87
18.12
1.4
2014
2015
2016
2017
2018
India's domestic of pharma ($ bn)
% growth
Source: IBEF
10.3
14.94
15.33
16.91
16.79
17.28
2.6
2.9
-0.7
10.8
19.14
10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
1,473
539
492
409
1,600
1,400
1,200
1,000
800
600
400
200
0
1,306
1,044
763
781
852
651
582
96
2014
2015
2016
2017
2018
2019 - June
Received ANDAs
Approved ANDAs
Source: FDA, First Generic Drug Approvals (Oct-Sept Year End)
GDUFA
40%
BA/BE
25%
Manpower
17%
Materials
15%
Others
10%
2014
2015
2016
2017
2018
2019
Cost of ANDA Development
India's export of pharma ($ bn)
% growth
Source: pharmexcil
Source: IQVIA, Cost Break up of ANDA in India
3-5cr
13
y t i t n a u Q
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
1400
1200
1000
800
600
400
India's Import of Drug Formulations
1.6
1.7
1.5
1.6
1.6
1.7
4.3
1.2
2.1
2.2
1.8
1.8
3.3
2.8
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0
e u l a V
9%
Industry Statistics
India Pharmaceutical Industry Composition
21%
Public Health Expenditure % of GDP
Per Capita Health Expenditure (In US Dollars)
Maldives
Thailand
2.90%
Bhutan
2.50%
Timor-Leste
1.90%
9.40%
y r t n u o C
Sri-Lanka
Indonesia
Myanmar
Nepal
India
70%
1.60%
1.10%
1.10%
1.10%
1.00%
770
y r t n u o C
Maldives
Thailand
Bhutan
Timor-Leste
Sri-Lanka
166
66
45
63
Indonesia
38
Myanmar
Nepal
India
14
8
16
Bangladesh
5
Branded Generics
Patented Drugs
Bangladesh
0.40%
Million MT
US$ bn
Source: Exim Report
Over the counter medicine
0.00% 2.00% 4.00% 6.00% 8.00% 10.00%
0
200
400
600
800
Source: KPMG Report
Source: National Health Profile, 2018
Worldwide Total Prescription Drug Sales ($ bn)
Prescription excl. Generics & Orphan
Orphan
Generics
60
69
558
66
77
67
82
70
88
76
94
590
572
569
581
100
565
78
80
81
112
125
576
583
608
631
663
706
114
262
109
240
104
216
100
192
95
169
84
138
89
151
749
785
828
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Pharmerging Medicine Spending and Volume by Type, 2023
$140–170Bn 485Mn SU
$39–43Bn 238Mn SU
$21–25Bn 220Mn SU
$28–32Bn 566Mn SU $105–135Bn 1,0166Mn SU
10
25
5
35
25
15
35
15
25
Spending
10 Volume
30
5
30
15
20
23
2
50
20
10 5
35
25
25
15
5
60
15
Spending
Volume
Spending
Volume
5 5
20
60
10 Spending
10
10
30
45
5 5 10
45
35
10
10
20
45
15
Volume
Spending
Volume
China
Brazil
Russia
India
Other Pharmerging
Source: Evaluate Report
Source: IQVIA
Unbranded
Other
OTC
Non-Original Brands
Original Brands
14
Average Pharma spends by country
Average spend - $107 person/year
250
200
150
100
50
0
Pharmerging Per Capita Spending by Country, 2022
Source: IQVIA Market prognosis, Sept 2017; IQVIA Institute, Oct 2017 Notes: Spending per capita, per capita growth and overall spending growth in Constant US $. Report: 2018 and Beyond: Outlook and Turning Points, IQVIA Institute for Human Data science, Mar 2018
15
Growth drivers for Indian generic
Key Industry Challenges
Inherent Competencies and Low-cost Manufacturing Capabilities
Highly Fragmented Market
Increasing Consolidation Through Co-operative Alliances
Conducive Regulatory Environment
The Medical Council of India has already given strict instructions to doctors to prescribe generic medicines
Generic medicines have to be stored separate from other medicines as per government directives
₹
BRANDED
Corruption and Red-Tapism
Drug Price Control Measures
Lack of manufacturing infra quality & GMP practices
Resistance by doctors to prescribe generics leading to lack of demand
Jan Ausadhi stores promoted by the government and also strengthen the Jan Ausadhi scheme, thus creating awareness towards generic drugs
Nepotism by pharmacist to push for branded medicines over generics
IMA should is taking measures to ensure quality, safe, affordable generic drugs
Unavailability of appropriate generic names equivalents of branded medicines
The National Health Protection Scheme is largest government funded healthcare programme in the world (well known as AYUSHMAN BHARAT PM-JAY SCHEME), which is expected to benefit 100 million families in the country by providing a cover of up to ₹ 5 lakh (US$ 7,723.2) per family per year for secondary and tertiary care hospitalisation. The programme was announced in Union Budget 2018-19.
16
Why branded drugs?
Why do people still take brand-name drugs ?
Basically, it's marketing. If the drug company can convince the average patient that the generic is the "cheap" version and that they deserve the best, many patients buy it. Also, if a patient is finally on a drug that works, he might be less likely to switch to the generic version for fear of losing the effect of the drug. And there are inactive ingredients in generic drugs that can be different from those in the brand-name drug. They don't affect the way the drug works, but they can make it look and taste different, making people wonder if the cheaper drug has left something out.
Influence of the brand name towards medicines
Lack of awareness towards generic medicines
Perception of inferiority of generics due to lower priced than branded
BRANDED
Efficacy of branded drug medicines
18
Zota’s Business Model
19
3-Pronged Business Strategy
Domestic Revenues 72% ( ₹ 6,312 Lakhs)
Export Revenues 21% ( ₹ 1,808 Lakhs)
Davaindia Revenues 7% ( ₹ 598 Lakhs)
100% Outsourced
Sold at MRP by Franchisee Distributor
259 Dossiers filed
52% YoY growth
Franchised Business 1250 SKU’s
80%-85% Fill rate, 95% Pvt label product
1050 Distributors
Gross Margins 30%–35%
195 Product Approvals
Balance 64 in last stage of approval
70-90% saving v/s branded medicines
Gross Margins 35%-40%
Over 3000+ Brands
EBITDA Margins 15%–17%
21.6% Utilization
70%-80% utilization by FY22E
Cloud based software
143 Stores opened
35–60 days Credit Period
Outlook 8%-10% growth
60Cr – 100Cr expected revenues at maximum utilization
50-60% YoY Growth anticipated
70% Medicinal & 30% Ayurvedic, Cosmetic & OTC products
Focus on Chronic Ailments
20
Operational Metrics – Annual Revenue Mix Pronged Business Strategy
Domestic CAGR 10.4% Exports CAGR 21.4%
6,664.3
6,746.4
6,909.7
15%
21%
FY18
FY19
5,866.1
5,350.8
4,559.8
3,825.4
565.5
431.3
295.5
607.3
493.7
1,807.7
1,190.0
85%
79%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
Domestic Revenues
Domestic Revenues
Domestic Revenues
Export Revenues
Export Revenues
Export Revenues
21
Domestic Business – Value Chain
Zota Health care presence in value chain
API
FDF
Zota Marketing
Clearing and Forwarding
Distributor
Retailer
Pharmacy OR Hospital
End Consumer
3000+ Brands
1050 Distributor
Marketing Manager
Regional Manager
Area Sales Manager
Medical Representative
Doctors
22
Export Business – Value Chain
Zota Health care presence in value chain
API
Manufacturing
FDF
Zota Marketing
Distributor
Exported
End Consumer
250
Each country Distributors
Supply to 22 Asian , African and CIS Countries
23
Davaindia Business – Value Chain
ZOTA
Wholesaler
Davaindia Franchisee
Consumer
24
Davaindia
Davaindia– Pharmacy Retail Chain
Franchisee Model
Asset light Business Model
Dedicated cloud based software for retailers reflecting real time data to Zota
Educating customers about inexpensive medicines
Started with 4 stores and touched a 143 stores
70% Medicinal & 30% Cosmetics, Ayurvedic & OTC products
KEY HIGHLIGHTS
500 stores anticipated and still expanding
Quality Medicines at lowest MRP
Focused on Cardiac, Diabetic, Thyroid ailments
Expected to cross 3,000 stores by FY22E
3000
Current revenue contribution to total sales at nascent levels
1250+ SKU’s
26
Davaindia
27
HARYANA (2)
RAJASTHAN (2) Jaipur(1), Jodhpur(1)
GUJARAT (77)
Surat(17), Navsari(3), Kheda(3), Vadodara(3), Rajkot(13), Ahmedabad(12), Gandhinagar(4), Mehsana(4), Sabarkantha(3), Banaskantha(1), Vapi(3), Bharuch(1), Bilimora(1), Godhra(1), Valsad(1), Himmatnagar(1) Kutch(3), Saurashtra(3)
MAHARASHTRA (24)
Nagpur(7), Pune(13), Chikhli(1), Mumbai(1), Latur(1), Nasik(1)
Davaindia Footprints
UTTARAKHAND (2)
Dehradun(2)
UTTAR PRADESH (3)
Firozabad(1), Ghaziabad(1), Lucknow(1)
% Davaindia across states
1.4%
1.4%
1.4%
2.1%
16.8%
23.1%
Gujarat
Madhya Pradesh
Maharashtra
Uttar Pradesh
53.8%
Uttarakhand
Harayana
Rajasthan
28
MADHYA PRADESH (33) Indore(17), Jabalpur(3), Bhopal(2), Sagar(3), Guna(1), Dhar(1), Gwalior(2), Khandwa(1), Mandsaur(1), Itarsi(1), Rewa(1)
Key Management Profile
Zota Healthcare Organisational Structure
Chairman/ Promoter
Mr. Ketan Chandulal Zota
Promoter / Whole Time Director
Managing Director
Mr. Himanshu Muktilal Zota
Mr. Moxesh Ketanbhai Zota
Promoter / Whole Time Director
Mr. Kamlesh Zota
Promoter / Whole Time Director Mr. Manukant Zota
CS
Mr. Ashvin Variya
CFO
Mr. Viral Mandviwala
Employees
HR
Employees
Marketing
Employees
Purchase
Employees
Accounts
30
Management Team
Mr. Ketan Zota
Designation – Promoter, Non-executive Chairman Position Held – Small retail medical store Experience – 35 years Qualification – D Pharmacy
Mr. Moxesh Zota
Designation - Managing Director Position Held – Entrepreneur and associated with the Company Experience – 5 years Qualification – Bachelor of Pharmacy, Master of Science (MBA) from UK
Mr. Himanshu Zota
Mr. Manukant Zota
Designation – Promoter and Whole Time Director Position Held – Retail Pharmacist and a Distributor of Medical Agency Experience – 27 years Qualification - Diploma in Pharmacy , Diploma in Computer Application
Designation – Promoter and Whole Time Director Position Held – Associated with the Company Experience – 24 years Qualification - Masters of Science Degree in Mathematics
Mr. Kamlesh Zota
Designation – Promoter and Whole Time Director Position Held – Sr. Technical Assistant and Production Officer Experience – 24 years Qualification – Bachelor of Pharmacy
31
Financial Metrics
Particulars
Installed Capacity (Nos. in Lakhs)
Tablet
Capsules
Utilized Capacity (Nos. in Lakhs)
Tablet
Capsules
Utilized Capacity (%)
Tablet
Capsules
Capacity & Utilization
FY14
4800
5400
504
845
10.50
15.65
FY15
FY16
FY17
FY18
FY19
4800
5400
921
170
19.19
3.14
4800
5400
1533
98
31.94
1.81
4800
5400
4800
5400
1186.27
113.49
2211.29
344.29
24.71
2.1
46.06
6.38
4800
5400
1842
364
38.38
6.74
Overall Capacity utilization of SEZ plant is around 22%
34
Profit & Loss Statement
Particulars (INR Lakhs)
FY14
FY15
FY16
FY17
FY18
H1FY18
H1FY19
H2FY18
H2FY19
FY19
Income from Operations
5,011.2
5,646.3
6,473.3
7,158.0
7,785.2
3,913.7
4,326.6
3,870.8
4,236.4
8,562.9
Other Income
Total Income
10.2
1.4
7.7
5.6
151.9
60.5
100.3
91.4
54.2
154.5
5,021.4
5,647.8
6,481.0
7,163.6
7,937.0
3,974.1
4,426.8
3,962.2
4,290.6
8,717.4
Operating Expenses
4,362.0
4,796.5
5,516.8
6,153.8
6,695.0
3,311.8
3,742.2
3,382.6
4,046.1
7,788.4
EBITDA
Margin %
Depreciation
EBIT
Margin %
Financial Charges
PBT
Margin %
Tax
PAT
Margin %
EPS
659.4
13.2
120.7
538.7
10.7
71.4
467.3
9.3
156.0
311.3
6.2
2.6
851.3
15.1
150.6
700.7
12.4
66.5
634.2
11.2
207.6
426.7
7.6
3.0
964.2
1,009.8
1,242.0
662.4
684.6
579.6
244.5
14.9
123.5
840.8
13.0
68.3
772.4
11.9
261.5
510.9
7.9
3.6
14.1
105.4
16.0
93.7
16.7
46.3
15.5
75.9
15.0
47.4
5.8
63.5
904.4
1,148.3
616.1
608.6
532.2
181.0
12.6
68.2
14.8
12.1
15.5
9.2
836.2
1,136.2
606.9
11.7
282.1
554.1
7.7
3.9
14.6
407.4
726.8
9.3
4.2
15.3
204.6
402.4
10.1
2.3
13.7
0.7
607.9
13.7
195.5
412.4
9.3
2.4
13.7
3.0
529.3
13.7
202.9
326.4
8.4
1.8
4.3
3.0
178.0
4.2
35.3
142.8
3.4
0.8
929.0
10.8
139.4
789.6
9.2
3.7
785.9
9.2
230.7
555.2
6.5
3.2
34
Particulars (INR Lakhs)
Share capital
Reserves and Surplus
Non-current liabilities
Current liabilities
Total Equity and Liabilities
Non-current assets
Current assets
Total Assets
Key Ratios
RoCE (%)
RoE (%)
Net debt to equity (x)
Interest coverage (x)
Inventory days
Receivables days
Payable days
Balance Sheet & Key Ratios
FY14
1,196.9
384.2
521.3
1,381.7
3,484.1
926.3
2,557.8
3,484.1
FY14
17.4
19.7
0.3
7.5
91.2
77.8
109.0
FY15
1,436.3
395.7
548.7
1,657.6
4,038.4
842.4
3,196.0
4,038.4
FY15
20.0
23.3
0.3
10.5
113.9
75.6
116.2
FY16
1,436.3
707.8
272.7
1,988.3
4,405.2
855.6
3,549.5
4,405.2
FY16
23.5
23.8
0.1
12.3
92.1
89.0
126.5
FY17
1,436.3
1,262.0
466.8
2,215.4
5,380.5
932.5
4,447.9
5,380.5
FY17
19.3
20.5
0.1
13.3
121.9
87.1
148.4
FY18
1,754.3
5,223.4
64.7
2,137.0
9,179.4
3,605.4
5,574.1
9,179.4
FY18
10.5
10.4
0.0
94.8
113.8
107.5
117.8
FY19
1,754.3
5,138.5
87.1
1,981.6
8,961.5
2,724.1
6,237.4
8,961.5
FY19
8.1
8.1
0.0
214.5
138.6
94.2
103.5
35
Thank You
Mr. Himanshu Zota / Mr. Ashvin Variya
"ZOTA HOUSE", 2/896, Hira Modi Street, Sagrampura, Surat-395 002(Gujarat)
hzota@zotahealthcare.com cszota@zotahealthcare.com
www.zotahealthcare.com