According to Adrian J. Slywotzky, “value migration” is the flow of economic and shareholder value away from an increasingly outmoded business design toward others that are better equipped to create utility for customers and profit for the company.

Mr. C Krishna Prasad, Chairman of Granules India gave us a glimpse into the future of the company and their aspiration to move into the upper echelon of the industry

Our Company is in the midst of an evolution. We have built a strong base business that will continue to grow as it gains defensible market share while expanding profit margins as more of the business comes from formulations and quality conscious customers.

While we are currently synonymous with large-volume products, we have taken several steps to move into more complex offerings. We have leveraged our existing capabilities to turnaround Auctus’ API operations which will be vital as we file ANDAs to expand our FD portfolio.

Annual report 2015

It’s one thing saying and its completely different thing delivering it, the below chart depicts their 10-year transformation journey

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Revenue contribution increased in FDs to 52% from 22% in the last 10yrs, However, moving up the value chain in competitive and regulated space like pharmaceuticals takes effort

Below are some excerpts from annual reports from the chairman letter highlighting pained involved in such transformations

As an optimist, I would say that the planned execution of our strategies has yet to materialize into tangible results, but we are seeing this as a strategic step towards sustainability.

The financial year 2018 was a year zero for us where the groundwork for our growth was laid down. We have made significant investments in the past few years and the team is working unwaveringly towards fulfilling our vision of becoming the global leader in pharmaceutical manufacturing by process innovation and unparalleled efficiencies.

The company has taken major strides towards value migration as depicted below

Stock market investing takes an emotional toll as stock prices are published every minute every day
Whether we like it or not the stock price is reality or at least reality for the moment. Granules India has been an emotional 3X ride in scorecard

There have been moments of doubt but management execution has helped in holding conviction

What’s in store for future

The company reported a Milestone quarter, the highest ever in the history of the company with quarterly revenue of INR 735 crore few days back

The stock is getting discovered and we will monitor the sustenance of margins as we are aware that there are no structural changes for easing of pricing pressures in the US market and more than 50% of Granules India revenue come from USA

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