Hester Bio - Notes from the Annual Report - 2016

• Cumulative production capacity of 6 bn doses once the Nepal capacity goes online
• 2015-16 performance was achieved despite a 6-month trough in India's poultry sector that affected the sector for 3 quarters. The trough was the result of high feed cost and low realization of poultry output of meat and eggs. This resulted in a lower replacement of chicks.
• Started trial production of two batches in its Nepal plant and submitted these to regulatory authorities in 2 African countries
• HBS has decided to make a strategic shift to health products over dependence on poultry products
• Focus on exports to de-risk company from exclusively depending on domestic market
• Poultry Vaccines Segment: Introduced two Poultry Vaccines namely the Salmonella Live Vaccine and the Inclusion Body Hepatitis Vaccine
• Large Animal Vaccines: started manufacturing and marketing of large animal vaccines. Currently, manufactures PPR and goat pox vaccine. The Indian plant at Mehsana produces the PPR Live vaccine strain meant for India (sungri strain); the Nigerian strain will be made in the Nepal plant for export markets
• Brucella abortus S19 vaccine will be commercialized this year
• Large Animal health Products Segment: Comprises of medicinal products, feed additives & disinfectants. HBS does not manufacture products themselves. The outlook for growth is robust and can outperform the other divisions in the near future.

Notes from Annual Report 2016: Poly Medicure

• Revenue was 402.86 cr vs 381.9 cr in FY15
• Net profit was 47.30 cr vs 61.01 cr (including 19.57 cr of exceptional items) in FY15
• EPS was 10.72 vs 13.83 in FY15
  
• 
  PML is starting a new R&D center with an investment of 12.5cr which is to be operational by Q3 2016
• New green field project at IMT Faridabad which is to be operational by Q3 2017 on an investment of 60cr
• PML to focus on new market opportunities in Oncology, Nephrology & Respiratory Care segments
• Product expansion is in process for Infusion therapy and Blood Management
• PML is planning to launch 8-10 new products in FY17
• PML is now exporting products to 95 countries
• PML is now present in 3000 key hospitals in India and plans to expand to 5000 hospitals in next 2 years
• Expanded the sales and marketing team with 80 new team members
  
• The Indian medical device market is the top 20 in the world and 4th in Asia after Japan, China & South Korea
• The medical devide sector was valued at USD 6.3 in 2013 and is expected to grow to USD25-30 by 2025
• PML is the leading exporter of infusion therapy, blood management, gastroenterology, surgery and wound drainage,
  anesthesia and urology products
• Over 65% of revenues come from exports
• PML has 144 product and process patents globally; filed for additional 394 patents in India and worlwide

Notes fom Annual Report - Supreme industries

•    No of distributors have gone up from 2469 to 2699
•    Value added product share has gone up from 34.2% to 36.73%
•    Current average monthly borrowing is 401 cr. SIL expects to reduce it to 300 cr in FY17
•    Supreme Industries Sharjah is exporting products to 15 countries - GCC, Africa, Australia, UK, Germany & Indian sub-continent. It has made inroads into Maldives and re-entered Saudi Arabia. It has also penetrated Solvent Cement market in Australia
•    Statutory auditors M/s Choggmal & co have stepped down and has been replaced by M/s Lodha & Co.
•    Polymer consumption has increased by 14% in volume terms which is double of GDP, something which did not happen in the last decade.

PLASTIC PIPING SYSTEMS
•    New plant at Kharagpur has started production. Full capacity to be scaled up by June 2016.
•    Further expansion of pipe manufacturing is expected at Kharagpur plant
•    cPVC volume growth was 23.7%; cPVC manufacturing has stabilized at Kharagpur
•    Roto moulding plant is being commissioned at Kharagpur, to start by April end.
•    HDPE piping systems gorwth was at 24.09%
•    SIL has launched a variety of septic tanks in technology tie-up with a South African company. Many other varieties are expected to be launched for underground water storage
•    SIL has produced multilayer foam pipe of 200 mm diameter, BIS certification in process
•    SIL has developed a cheap & economic model of manhole cover
•    In process to setup a PVC plant at Jalgaon to produce 20,000 tons at full capacity and is expected to go on stream by Mar 2017
•    Submersible pipes are getting good traction. Monthly sales are expected to rise to 750 tons in FY17 from 270 tons.
•    Maharashtra Fire Department has issued a directive that makes installments of fire sprinklers mandatory in every room for residential building above 45 m and in common areas for buildings between 25m to 45m. SIL has tied up with FlameGuard of USA to manufacture and sell these sprinkler systems. SIL is planning to sell the same product in Sri Lanka as well.
•    The portfolio of bath fittings has reached 90 items. Chrome fittings are likely to be launched this year

FURNITURE
•    SIL has introduced 8 new models this year and plans to add 7 new models this year.
•    SIL is looking to expand into export market with their new line of furniture
•    New plant being put up at Kharagpur; to start in the Q1 of FY17
•    Increased distribution channel partners to 746 and have started selling online as well; partnering with flipkart, amazon, snapdeal, pepperfry etc

INDUSTRIAL PRODUCTS
•    SIL started manufacturing complete coolers for one company. Expects good growth in this segment.
•    BOSCH, a new customer, has setup a large manufacturing plant for home appliances. SIL expects good orders from them.
•    Working closely with Honda cars on multiple models

MATERIAL HANDLING
•    New facility setup and started in Malanpur (M.P) for roto moulded products
•    Two new plants being setup - at Kharagpur and Kanpur; to be operational in April/June 2016

PACKAGING PRODUCTS
•    A specialty product - high gloss film has been successfully developed
•    The PPD plant at Kharagpur is now fully operational and is expected to generate a revenue of Rs 50cr

COMPOSITE CYLINDERS
•    Received initial educational order from HPCL for 5 & 10 kg cylinders; dispatches expected in April 2016
•    SIL received orders for 7.5 & 15 kg cylinders as well
•    FY17 may be a transformational year for this division

Getting Back to Basics - Presentaion at Investment Meet

We had the third meeting of your investment forum today. The venue was at Hotel Lindsay, bang opposite New Market. Thanks to Raghav for being gracious enough to arrange for the venue.