Arch Pharmalabs Growth

• The company's revenue has grown from Rs. 652 cr. in FY20 to Rs. 799 Cr in FY'21. One of the key reasons for this growth was increased operational activities at the manufacturing sites, along with it the revenue grew due to the impact of covid 19 and the china plus one strategy. After china, only India and the EU have the advantage of producing API and India is a better choice than the EU, due to lower costs.
• The company's operating revenue includes API/Intermediate sales and other operating sales, the API sales increased from Rs. 630 cr. in FY20 to Rs. 683 cr. in FY21, and other operating incomes increased from Rs. 2 cr. in FY20 to Rs. 227 cr. in FY21. While the company's other income increased from Rs. 19 cr. in FY20 to Rs 92 crore in FY21, the main reason was a 382% increase in other non-operating revenue year on year (y-o-y).
  

• The company reported a loss of Rs 891 crore in FY21, compared to a loss of Rs 183 crore in FY20, a 5 times increase. In FY21, the company's revenue per expense was 0.47, compared to 0.78 in FY20. The reason for this year-on-year increase in losses is due to an increase in operating expenses and interest costs. The operating expenses reached to Rs. 892 cr in FY21, which is primarily attributable to the rise in establishment costs which were incurred due to bad debts and provisions written off worth Rs.1,406 cr., while the increase in interest expense was 9% sequentially. But altogether the company reported a profit of Rs. 1869 cr. in FY21 which was due to exceptional items.
• The respective exceptional item/gain of Rs. 2781 cr. is related with loans/interest written back (by JM financials Asset reconstruction) for FY21.

The company's EPS has increased dramatically, standing at Rs.123 per share in FY21, up from Rs.-11 in FY20. The reason for this exponential growth was expectational items worth Rs. 2761 cr. in loans/interest written back. However, the company loss is Rs 891 cr. when the expectational items are removed from the FY21 net profit. The company's share count remains unchanged at 15,19,23,076.

• The company's book value for FY21 was Rs -45 per share in comparison to Rs -99 per share in FY20. The book value of the company has been negative for the past few years due to negative total equity. This is due to a series of losses each year which leads to a negative reserves account balance for the company.
• In FY21 the company reported a loss of Rs. 891 cr. while the net income after the adjustment of exceptional items was positive Rs.1,896 cr. which lead to an increase in other Reserves and surplus from Rs. -2,302 cr. in FY20 to Rs. - 467 cr. in FY21. This increase led to an overall rise in book value by 55% y-o-y. While the outstanding shares of the company remain the same at 15,19,23,076.

The EBITDA for the company has fallen from Rs 55 cr. in FY20 to Rs. - 633 cr. in FY21. The reason for this massive rise in the losses was due to the rise in establishment expenses which were accounted for bad debts written off and deposits written off by Rs 830 cr. and Rs. 577 cr. respectively, along with this, there was a significant rise in employee benefits expense of 20% y-o-y.

The operating income of the company for FY21 is at Rs -891.45 cr. in comparison to Rs. -183 cr. in FY20. The overall fall in the EBT was driven by the EBITDA which was Rs. -633 cr. for the same period. were as the overall PBT was amplified due to an increased interest cost of Rs 231 cr. in FY21 in comparison to Rs. 211 cr. in FY20, reason for this rise in interest cost was the capital restructuring by JM Financial ARC.

Total assets have decreased from Rs 3,109 cr. to Rs 2,362 cr. This is primarily due to a decrease in. trade receivables, inventory, short-term loans & advances, and long-term investments by Rs 165 cr. , Rs. 61 cr. , Rs. 322 cr. and Rs. 145 cr. respectively in FY21. This significant drop in trade receivables is due to a payment from 6-month debtors of several Rs. 124 cr., as well as a decrease in short-term loans and advances due to payment received from advances against supplies and services.

Cash flow from operations showed a significant rise in FY21. It was Rs.187 cr. in FY20 and rose to Rs. 287 cr. in FY21. The rise primarily accounts because of the addition in current liabilities and adjustment of establishment expenses (The expenses and asset purchases associated with getting the business started are included in the establishment costs) by Rs. 216 cr. and Rs. 756 cr. in FY21.