Hikal : Results Presentation Q4FY22

Results Presentation - Q4 FY22

Safe Harbor

This presentation and the accompanying slides (the "Presentation"), which have been prepared by Hikal Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

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Certain matters discussed in this Presentation may contain statements regarding the Company's market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company's actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.

© Hikal Limited

Executive Chairman's Message

Jai Hiremath

"For the financial year '22, we achieved a PAT of Rs 161 Crores, which is a growth of 21% as compared to last financial year. Our Board of Directors has recommended a final dividend of Rs 0.40 per share (20% of FV). Along with an interim dividend of Rs. 1.20 per share (60% of FV) declared in February 2022, the total dividend for FY22 stands at Rs 1.60 per share (80% of FV).

On 6th Jan 2022, an unfortunate incident occurred at Sachin GIDC, Surat. Allegations were made that the tanker involved was

carrying a by-product which allegedly came from Hikal's Taloja factory. All relevant employees of Hikal have voluntarily co-operated in the ongoing investigation. Since then, there has been a judicial recognition of the non-existent role of Hikal and its employees in the entire incident, as elucidated by the Hon'ble Gujarat High Court in its order. The matter is still sub-judice and presently the Company is in a very strong legal position. As a result of the Sachin GIDC incident the MPCB had given a closure notice to the Taloja factory. We have provided all the documents to MPCB and are confident of resolving the issue on the closure notice at the earliest.

The revenue for pharmaceutical business saw a muted growth of 3% and stood at Rs. 307 Crores in Q4 FY22. It was in line with the recent trend witnessed by the API industry due to strong transient headwinds of softening demand and disruptions in global supply chains. This combined with the challenging raw material disruptions and significant increase in input costs has seen a pressure on our margins in Q4 which we expect to continue through the first half of the year. On a positive side, we continued to receive new inquiries from global innovator companies in the CDMO business segment. We expect this segment to be a lead growth driver in the next few years.

The Crop Protection business revenue stood at Rs 194 Crores in Q4 FY22. We continued to face raw material availability challenges for some of our key products. However, the demand remains strong in the market. We will continue developing alternate domestic suppliers to mitigate future supply chain disruptions. We are investing in new capacity addition, which is expected to come on stream in second half of this financial year. On the CDMO front, we continued receiving several new inquiries and are working on a portfolio of new products for global innovator companies.

This year has marked the beginning of our strategic transformation journey, 'Pinnacle Program'. The program is seeing good momentum along with positive changes across both businesses. Along with a leading management consultant, we have developed a clear set of priorities for the growth of our Company over next five years through a new strategic direction. This will help reach our bold aspiration of driving profitable as well as sustainable growth and transforming our business to go from 'Good to Great'.

As the industry faces strong headwinds due to the inflationary pressures and a sharp rise in input costs of raw material, energy and

solvents, we expect growth to be tapered and margins to be contract in the next year. We will continue to focus on passing through increased input costs to our customers. However, we do expect longer lead times given the inflationary pressures even customers are facing. To counteract the challenging environment, we continue to undertake multiple cost reduction as well as operational efficiency improvement initiatives within our business excellence program to minimize the impact of rising cost on our margins.

We expect FY 2022-23 to be a challenging year, one of consolidation and the following year we will return to sustainable and profitable growth".

© Hikal Limited

Quarterly Financials Highlights

Financial Highlights - Q4 FY22

Revenue - Q4 FY22	EBITDA - Q4 FY22	EBITDA Margin - Q4 FY22
Rs. 502 Crore		Rs. 61 Crore		12.2%
YoY	QoQ	YoY	QoQ	YoY	QoQ
-6%	-2%	-44%	-34%	-837 bps	-591 bps

PAT - Q4 FY22			EPS - Q4 FY22
		Rs 1.68
Rs. 21 Crore
YoY	QoQ		YoY	QoQ
	-59%	-54%
-59%	-54%

© Hikal Limited