Unichem Laboratories - Meeting Update - Centrum

Benefits from re-structuring

We recently met the management of Unichem Laboratories (ULL). Key take aways from the meeting are:

- The company has undergone re-structuring over last six quarters and is now poised for good growth.

- On a standalone basis, ULL derives 69% of its revenues from the domestic market and 30% from the international markets.

- ULL entered into acute segment (70% of the domestic market) in FY11 and commenced a new division for acute segment with 400MRs. However, the company faced higher attrition rate of 35-38%. ULL also witnessed sharp fall in EBIDTA margin from 25% to 13%.

- The company is now focused on cost structure and the EBIDTA margin has grown on QoQ basis. In Q4FY12, the EBIDTA margin improved by 60bps QoQ.

- ULL has been able to achieve inventory level reduction at distributors from 80 days to 40 days over the last 6 quarters. The company also streamlined the credit norms and corrected the product portfolio.

- The management expects 100bps improvement in EBIDTA margin over next 3 quarters due to the change in distribution strategy.

Source : Equity Bulls

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