Dear Shareholders,
As we come together to look back on the last year, I am honored and privileged to speak
to you on this momentous occasion. The year gone by brought along a diverse array of
experiences—marked by both formidable challenges and promising opportunities. It is
with great pride that I acknowledge our collective resilience and deep commitment, which
have been instrumental in guiding us through these trials.
Our determination has not only enabled us to surmount temporary setbacks but also to
seize and capitalize on the opportunities that arose. As we embark on the journey for the
2023-24 fiscal year, it's appropriate to acknowledge the significant strides we've made
over the past forty years. This moment of reflection highlights the incredible journey
we've undertaken and the lasting strength of our organization.
Macroeconomic Trends and Industry Dynamics
The demand for reliable and efficient labware has always been critical.
In recent years, particularly during 2021-22 and 2022-23, the life science industry has
encountered significant challenges. However, signs of recovery have begun to surface in
the latter half of 202324, a trend we are meticulously tracking and preparing to harness.
We anticipate steady progress, especially within the realms of pharmaceuticals, Contract
Research Organizations (CROs), research institutions, and diagnostic centers.
Technological advancements and breakthroughs have been pivotal in driving this resurgence.
Cutting- edge innovations in manufacturing techniques and material science have culminated
in the development of sophisticated plastic labware designed to meet the stringent demands
of today's scientific community. These advancements ensure that our labware products are
not only durable and cost- effective but also resilient to extreme conditions such as
different temperatures and chemical exposure commonly encountered in laboratory
environments.
Moreover, the growing demand from emerging economies, particularly India, has
significantly bolstered the plastic labware market. As these nations ramp up their
research and development capabilities, the need for high-quality labware solutions has
intensified.
Performance Review
Holding a substantial market share in our product category in our addressable market,
Tarsons has established itself as a trusted and preferred brand over the past four
decades. Our commitment to excellence has earned us the confidence of our customers across
diverse end markets, reinforcing our standing as a top choice in the industry.
Our success is underpinned by a robust distribution network that includes approximately
140 distributors nationwide. Furthermore, our dedicated sales team of over 40
professionals maintains close contact with our end customers, driving product sales and
effectively crossselling our extensive portfolio.
This strong domestic presence is complemented by our international reach, supported by
45 distributors across global markets.
In 2023-24, we continued to enhance our international footprint through a dual
strategy: branded sales under the Tarsons name and Original Design Manufacturing (ODM)
sales via white-label arrangements. The balance of our overseas business was notably 35%
branded and 65% ODM. This strategic approach allows us to cater to a diverse range of
market needs while expanding our global presence.
Recent Acquisition
The strategic acquisition of Nerbe, a Hamburg-based leader in plastic labware products.
This acquisition underscores our commitment to capitalizing on the burgeoning prospects
within the international market.
With this acquisition, we are well- positioned to make substantial inroads into the
European market. Nerbe's well-established distribution network and deep-rooted industry
expertise provide us with a solid foundation to enhance our presence in this key region.
By integrating Nerbe's extensive experience and valuable relationships, we can now offer
an even broader array of products and services to meet the diverse needs of our
international clients.
This strategic move not only opens new avenues for growth but also propels Tarsons to
new heights in the global arena. We are confident that the synergy between Tarsons and
Nerbe will drive our continued success and reinforce our position as a leading player in
the international labware market.
Financial Performance
In reviewing our financial performance for 2023-24, our standalone revenue was found to
be standing at 7 277 Crores, reflecting a modest decline of 2% from the previous year. The
standalone EBITDA for the same period was 7 103 Crores. The margins for 202324 were
impacted by several factors, including a shift in our product mix, one-off expenses
amounting to 7 2.8 Crores in Q1 related to due diligence for a potential acquisition that
ultimately did not materialize, and 7 3.7 Crores in provisions for inventory.
When adjusted for these one-off expenses, our EBITDA stood at 7 110 Crores, resulting
in a margin of 40%. Additionally, our margins were influenced by the initial costs
associated with our new facility in Panchla, which is projected to commence revenue
generation in 2024-25.
On a consolidated basis, incorporating both the standalone India business and the
recently acquired Nerbe business, our total revenue reached 7 296 Crores with an EBITDA of
7 100 Crores. It is important to note that consolidated margins may exhibit variance due
to the integration of Nerbe, which currently operates as trader with lower margins
compared to our Indian manufacturing segment.
We are actively pursuing strategies to enhance profitability by leveraging synergies
between our operations and Nerbe's established distribution network. Our focus is on
expanding cross-selling opportunities and optimizing operational efficiencies, which we
believe will drive revenue growth and improve our profitability over time.
Update on Capex
In Panchla, we are making significant strides in our expansion efforts. We are
venturing into the cell culture products segment—a new and exciting area for
us—while simultaneously increasing our capacities for existing product lines.
The civil construction of the site has been completed, and we are on track to have the
facility fully operational. We anticipate that initial production for commercial sale will
commence in H2 FY 2024-25.
At our Amta plant, we have formalized a Memorandum of Understanding (MoU) with the
Board of Radiation and Isotope Technology. This move will help reduce our dependency on a
single vendor and enhance our operational flexibility.
Additionally, we are advancing construction on our new single warehouse operations.
This development is aimed at optimizing our inventory management and streamlining our
operational processes to boost efficiency. We expect this facility to be completed and
operational by Q1 FY 2025-26.
Way Forward
As we acknowledge the current challenges faced by our industry due to external factors,
I want to reaffirm our undeterred commitment to maintaining excellence. Despite these
obstacles, our confidence remains strong as we look ahead to the opportunities and
challenges that lie before us.
The recent acquisition of Nerbe represents a pivotal milestone in our journey,
heralding a new phase of growth for Tarsons. This strategic move not only opens new
avenues for expansion but also reinforces our dedication to enhancing our presence in the
global labware market.
As we continue to navigate this evolving landscape, we remain focused on leveraging our
strengths and embracing the potential for growth that lies ahead. Thank you for your
continued support and confidence in Tarsons as we advance into this exciting new chapter.
Closing Note
As we draw this update to a close,
I want to extend my heartfelt gratitude to all our stakeholders for their unwavering
support and trust in Tarsons. We are aware of the current challenges facing our industry,
which are shaped by external factors that continue to evolve. Nevertheless, our commitment
to excellence remains resolute, and we are steadfast in our mission to navigate these
complexities with determination and agility.
Thank you once again for your invaluable support and confidence. Together, we will
continue to build on our successes and strive toward new heights of excellence and growth.
Regards,
Sanjive Sehgal
Chairman & Managing Director.