Mankind Pharma To Raise Rs 10,000 Crore Via Debt Instruments: Vice Chairman & MD Gives Insights | NDTV Profit - video Dailymotion

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00:00Rajiv Juneja, Vice Chairman and MD of Mankind Pharma now joins in.

00:04Hi Rajiv.

00:05Good morning.

00:06Thanks for joining us.

00:07Rajiv, now help us understand this.

00:09You have been in the news for all the right reasons on back of that BSV acquisition that

00:14you announced.

00:15We will talk about the financials of what this acquisition does to you later.

00:20But first up, you had a QIP that was announced to the tune of 7500 crores in the fourth quarter.

00:27The market was of the opinion that this 13,000 crore acquisition would be part funded by

00:31internal accruals and part funded by funds raised to the QIP.

00:36Now of course, we believe you have also increased your credit limit by 10,000 crores.

00:41You want to tell us what is this, what are you going to do with all the funds?

00:45Is the acquisition completely going to be debt funded?

00:48Is it going to be part equity?

00:50We are slightly lost.

00:52Thank you so much for calling me here and let me clarify you right from the beginning,

00:58we have always been averse to having more of debts.

01:03So what basically would happen going forward in the next few days time or in months time

01:09that as a whole out of approximately 14,000 crore rupees deal, 4,000 crore rupees would

01:16be coming from company side, the rest 10,000 is there.

01:20Out of rest 10,000, 3,000 crore rupees would be QIP and the rest would be debt, which will

01:27be approximately the tune of EBITDA to debt ratio would be two times.

01:35That is the actual picture.

01:37So whatever we are taking right now, 10,000 crore rupees permission, it is till the time

01:45we go for QIP, but ultimately QIP would be in the range of 3,000, 7,000 would be debt,

01:554,000 would be coming from company side.

01:58That's the actual position.

02:00Okay, that makes complete sense, Rajeev, now all of this adds up.

02:05So that debt is literally just a bridge to get you from now until the QIP to fill that

02:11gap of 3,000 crores, which will be done through the QIP.

02:15Let me understand this and correct me if I'm wrong.

02:18You're paying about 13,500-14,000 crores to acquire BSV.

02:23Is that going to be all in terms of money spent to get the ball rolling or will there

02:28be more investments between now and say when this turns revenue accretive, for which you

02:34already have a deadline that you could dip into as and when needed?

02:37Yeah, as of right now, this is the only investment would really happen.

02:44I cannot say going forward how much 100, 200 rupees more may be spent for collecting

02:50certain things, but all in all, it's a fantastic NLP entity.

02:56It will add a lot of entry-value products to mankind's kitty.

03:01We were looking for this entity from last couple of years in 2019 as well.

03:05We tried to acquire this, but lost to advent.

03:09So God has different kind of a planning.

03:11So we are having it now much better BSV.

03:16Position right now is that this would be sufficient, no more money, more would be required.

03:22Rajiv, going forward, we have all sorts of numbers when it comes to this particular acquisition

03:29and the kind of contribution it can make to your growth, your top line, as well as your

03:34overall margins.

03:35So can you give us a better idea about what you are estimating and what this acquisition

03:41can do for your consolidated numbers?

03:43If you look at mankind, mankind's growth has always been in the range of 1.3 to 1.4 times

03:51to IPM growth, say approximately in the first quarter, our growth is 12 point some percent.

03:59On the second side, growth-wise, BSV has better growth than us, 15 to 20 percent.

04:06That's a kind of a range.

04:08Their EBITDA is more than us, our EBITDA in the range of 25 to 26 percent, their EBITDA

04:14is in the range of 28 to 30 percent and going forward, this would always increase actually.

04:21So all in all, what we are basically acquiring is a fantastic entity in the form of having

04:28what mankind never had, very high entry-level products, which should not be seen from the

04:35lenses of pharma side.

04:37This is a different kind of entity where products are amazing.

04:42To make these kind of products, you need a time of 5 to 10 years.

04:48At any given time, a number of their products are in almost a monopoly kind of a stage.

04:56If any other competitor would be coming, the price does not go down, profit remains good.

05:02That's a plus side of this business.

05:05You talked about how this debt funding is going to be a little bit of a band-aid for

05:11you through that QIP, right?

05:12But the fact remains, you're still going to raise 6 to 7,000 crores that will be used

05:15to fund the acquisition.

05:17Now what will that do to your finance costs?

05:19Because I'd imagine it would impact finance costs quite significantly and hence impact

05:24profitability at least in the next couple of quarters.

05:27Is that a fair assumption?

05:30So I can tell you that as these credit ratings have been very kind to us, they have given

05:35us a double A plus kind of rating that really talks about the health of mankind.

05:42And I can tell you in numbers, once this stage will come to know, I mean many other things

05:48will happen in the meanwhile.

05:51By the end of October, we'll come to know when bankers, bankers have given us some kind

05:56of a approximate kind of a percentage of interest rate they will be charging.

06:02But we feel that in the next three years' time, hopefully, we'll be able to just pay

06:07back this debt.

06:09In the history of mankind, we have always been averse to debt, never believed in taking

06:14any kind of a debt.

06:15For the first time, we are taking debt.

06:17So we're also equally concerned that from the books of mankind, that should go away.

06:25And for that, there are some non-core business in the books of mankind, Western hotels are

06:31there.

06:32We have put those hotels on the block.

06:35And whatever money would be coming, that would be given to these banks so that earlier, the

06:41better.

06:42That's our payback.

06:43All right.

06:44Well, Rajiv, we'll leave it at that.

06:48Thank you so much for joining us and taking us through the latest in terms of the contours

06:53of your update here.

06:54Of course, we look forward to having another conversation soon once we actually do have

06:59more of a clarity when it comes to your debt numbers eventually down the line.

07:03But thank you so much for joining us and taking us through this update.

Mankind Pharma To Raise Rs 10,000 Crore Via Debt Instruments: Vice Chairman & MD Gives Insights | NDTV Profit

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