With its new state-of-the-art formulations plant at Baddi going fully on stream, the financials are going to improve substantially, which is likely to improve the discounting. The new plant is expected to give an additional turnover to the tune of Rs 50 crore in the current fiscal. The company is also seeking the UK's MCA approval, which will help the company take up substantial exports to Europe. The company's product mix looks very attractive. The launches in the high value and high growth therapeuthic segments viz, cardiovascular, anti-depressant, anti-inflammatory and anti-infective segments augur well for the company.

The diversification to high value segments has already yielded results and the profit in the nine-month period has more than doubled from Rs 4.01crore to Rs 8.75 crore.

Due to its focus on value-added products, the profitability margins have taken a big leap. NPM zoomed from 2.52 per cent to 6.3 per cent for the nine month period of 1998-99. Although Unichem's new plant to manufacture antibiotic formulations went on stream in March 1998, it has now stabilised fully and would yield benefits in the current financial. Production of the total range of Ampoxin has already commenced and the brand features among the top 20 brands in the country.

Ashok Jain, chief executive-pharma division, said, ``The plant contributed to the tune of Rs 30 crore in 1998-99, but its contribution to the revenue would go up further to Rs 50-55 crore in 1999-2000''.

``The plant confirms to the stringent international quality standards as prescribed by various overseas bodies. This will help us in obtaining the UK-MCA approval which would further open the gates to overseas markets,'' added Jain.

The plant at Baddi will manufacture betalactum range of antibioticformulations including oral solids, parentals and dry syrups. The plant has an installed capacity to produce 150 million capsules, 45 million tablets, 30 million vials and 5 million syrup formulations. Besides, the company has already modernised and expanded its bulk drug facility at Roha and is also in the process of modernising its plant at Ghaziabad. The low equity and high EPS make the stock attractive. It has a relatively low equity base of Rs 4.24 crore and a very high annualised EPS of Rs 27.39.

For the first nine-month period of 1998-99, turnover stood at Rs 139 crore against Rs 159 crore for 1998-99. Although the company is reeling under high interest cost, the growth in cash profits would help the company pre-pay a part of its high cost debt. The interest cost stood at Rs 5.35 crore against Rs 5.99 crore in the last financial year. Despite higher interest cost and depreciation due to the new plant setup, the profits, as a result of improved margins, have shot up substantially.

--SanjaySardana