AMRUTANJAN HEALTHCARE

Aiming at pan-India brand recall

Chennai-headquartered and 130-year old Amrutanjan Healthcare is one of the oldest Ayurvedic and OTC brands. The core focus of the company is to create a niche for itself with a strong portfolio of affordable healthcare, personal and hygiene care products in a highly competitive market. Thanks to its flagship brand – Amrutanjan Pain Balm — the company is a household name in India.

The company was promoted in 1983 by social reformer, journalist and freedom fighter Desodharka Sri Nageshwara Rao Pantulu Guru. The Amrutanjan brand has now been repositioned with ‘Pure Healthy Essence’ as its corporate promise to consumers. Apart from the popular pain balm, the company has been constantly expanding its product portfolio with a range of pain management products (aromatic balms, creams and sprays for headaches and bodyaches. The company also has a presence in premium category products under its sub-brand ‘Roll-on’, and has launched brand ‘Relief’ which caters to congestion-related issues like cold rubs, nasal inhalers, lozenges and cough syrups. It is now taking action to focus on the competency of each product and its application. From R&D to branding to advertising, Amrutanjan is positioning itself as a specialist in a competitive scenario.

With a view to diversifying its product range, Amrutanjan Healthcare in 2015 entered the field of sanitary napkins under the brand name ‘Comfy’, and positioned it as an affordable alternative for a larger target audience.

INTO SOFT DRINKS

The company has also entered the business of soft drinks with the acquisition of Siva’s Soft Drink Pvt Ltd whose flagship pulp-based flavoured fruit drink brand ‘Fruitnik’ has an annual revenue of around Rs 20 crore.

Amrutanjan has been growing slowly but steadily on financial front. During the last 12 years, its sales turnover has advanced more than three times – from Rs 128 crore in fiscal 2012 to Rs 380 crore in fiscal 2023, with operating profit more than doubling from Rs 20 crore to Rs 44 crore and the profit at net level more than trebling from Rs 12 crore to Rs 40 crore. Going ahead, prospects for the company are all the more promising. Consider:

• The company’s marketing stronghold is in south India, which contributes over 60 per cent of its revenues. It is now planning to expand its foothold in the western and north zones. As some of its products, particularly the pain balm, are household names, the company will not have much difficulty in spreading its wings pan-India.
• Again, the company has devised an M5K distribution plan under which it is in the process of expanding its distribution in rural and semi urban areas to strengthen its footprint. It aims to ramp up its distribution network by appointing 5,000 distributors and sub-stockists. It also plans to scale up its presence in the e-commerce channel and to increase the ecom contribution from the current level of 0.5 per cent to 1.3 per cent of overall revenues. In the OTC domestic market also, the company plan to expand noticeably.
• Amrutanjan is chalking out a plan to strengthen and expand its additional businesses like Comfi sanitary napkin and Fruitnik soft drink, both of which are expected to add Rs 100 crore to its turnover within a couple of years. According to a research study by ‘Research and Markets’, the Indian sanitary pads segment, which was valued around Rs 2,500 crore in 2018, is expected to reach Rs 6,000 crore by 2025, expanding at a CAGR of 14.92 per cent.

‘PAIN’ FORTE

• In its main business of Ayurvedic medicines, the company has a strong focus on being a market leader in the affordable healthcare and hygiene space. Pain management being its forte, it is consistently growing in this segment. Apart from traditional balms, it has also ventured into newer categories like ‘Roll-on’ muscle spray, ‘Decorn’ corn caps and congestion ‘Reelief’. z Amrutanjan is fundamentally very strong, with a steady growth in financials – sales CAGR during the last 10 years (March 2014-2023) being 11 per cent and profit CAGR being 12 per cent. The company’s financial position is very strong, with reserves at the end of March 2023 being Rs 288 crore – almost 76 times its tiny equity capital of Rs 3 crore. It is a totally debt-free company with zero interest obligations. The ROE for a 3-year average is 24 per cent.

Shares of the company are quoted around Rs 725. Discerning investors will do well to include these stocks in their portfolio.

PERFORMANCE INDICATORS (Rs. in crore)

PARAMOUNT COMMUNICATIONS

Smorgasbord of power cables

New Delhi-headquartered Paramount Communications (originally known as Paramount Cables Corporation) is one of India’s leading wire and cable manufacturing companies with over six decades of operations. The company is part of the Paramount Cable group which was promoted by the late Shyam Sunder Aggarwal way back in 1955. The group has built up a portfolio spanning a comprehensive range of high voltage (HV) and low voltage (LV) power cables, optical fibre cables and other telecom cables, railway cables, specialized cables, instrumentation and data cables, and fire survival cables, among others. Paramount Cables has a prestigious clientele that includes government, institutional and major private sector organisations – both national and international — in the power, telecom, railways, IT and communication, construction, defence and space research sectors, among others.

With a focus on manufacturing excellence, technological advancement and customer satisfaction, the company continues to meet and exceed global quality benchmarks and provide total cabling solutions for its customers.

Paramount has a strong export base, having executed orders for reputed international corporations and agencies in various countries, including the UK, Spain, Russia, South Africa, the UAE, Jordan, Oman, Kuwait, Qatar, Iraq, Sri Lanka, Ukraine, Chile, Tanzania, Ghana, Kenya, Zambia, Nepal, Bangladesh and Nigeria.

However, there is nothing worth writing home about the financial performance of the company. During the last 12 years, sales and profits have moved in an irregular fashion. The sales turnover had declined from Rs 713 crore in fiscal 2012 to Rs 677 crore in fiscal 2013 and further to Rs 308 crore in fiscal 2016. But thereafter it has recorded Rs 433 crore in fiscal 2018 and furthermore Rs 796 crore in fiscal 2023. Likewise, on the earning front the operating profit was negative till fiscal 2018, with the loss amounting to Rs 14 crore in fiscal 2012, rising to Rs 20 crore in fiscal 2014 and further rising to Rs 48 crore in fiscal 2017. But it came into the black with a profit of Rs 42 crore in fiscal 2019, which improved to Rs 48 crore in fiscal 2023. Interestingly, the company has started doing well for the last two years or so. What is more, its prospects are quite encouraging going ahead.

DIVERSE CLIENTS

Paramount caters to a diverse range of industries, including telecommunication, railways, space research, thermal and nuclear power plants, petrochemical, fertilisers and electronics, which require a wide range of technically advanced cables, cords and wires. All these industries are doing quite well at present and hence their demand for Paramount products is steadily going up. This means there are bright chances for the improvement of the company’s topline as well as bottomline.

• The company is known for the technological excellence of its products and has been presented several awards and certifications. It has been awarded ISO 9001 and 14001 by Moody International, bearing eloquent testimony to the stringent quality measures of the company. It has also got several Indian specifications. For example, it has been licenced by the Bureau of Indian Standards (BIS) to mark its products with IS7098 part 1for XLPE power cables, IS 14255 for Ariel bunch cables, IST 15694 for PVC cables and IS 1554 Part 1 for armoured PVC cables.
• These certifications have attracted several buyers, domestic as well as foreign. Among the domestic clients are Power Grid Corporation of India, National Thermal Power Corporation, Bharat Heavy Electricals (BHEL), Department of Atomic Energy of the Government of India, and Indian Oil Corporation. As far as foreign clients are concerned, the company has executed orders for reputed international corporations and agencies in several countries, including the UAE, Qatar, Iran, Kuwait, Jordan, Oman, Africa, Sri Lanka, Ukraine, Chile, Tanzania, Ghana, Kenya, Zambia, Nepal, Bangladesh and Nigeria.

BUSTING DEBT

• Paramount was overburdened with a debt of Rs 471 crore in fiscal 2011. But the management has systematically strived to bring down the debt to Rs 181 crore by fiscal 2022. If the pace of debt reduction process is any guide, the company will be able to wipe out its debt within a couple of years or so. Once the balance sheet becomes lean, shareholders can expect reasonably good returns as, after 2008, the company has not been paying any dividend.

Paramount shares with a face value of Rs 2 are quoted around Rs 34/35. In view of the recent improvement and better outlook going ahead for the company, discerning investors can certainly invest in this scrip.

PERFORMANCE INDICATORS (Rs. in crore)