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M/S. Medi Mart India Private Limited.

PROJECT AT A GLANCE

Particulars 1. 2. 3. 4. Name Constitution Date of incorporation Office

Description M/S. Medi Mart India Private Limited. Private Limited Company 08-10-2008 Flat No.302 & 303, Classic Court Apartments Erramanzil, Hyderabad 500 082.

6. 7.

Line of Activity Directors

To set up Retail Outlets of Pharmaceuticals Dr. R.Reddeppa Reddy Ms. N.Bharathi Mr. D.SudhakarReddy Mr. P.Chaitanya Mr. D.Prabhakar Reddy

10. 11. 12.

Cost of the Project Finance Financial Projections

Rs. 750 lacks Term Loan (Proposed) Rs. 250 Lacks Working Capital a) b) c) Debt equity Ratio Promoters Contribution DSCR: Gross DSCR: Net d) e) B.E.P. I.R.R. Rs. 300 Lacks : : : : : : 1.25:1 26.67 % 2.42 2.85 65.60 % 24.76 %

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M/S. Medi Mart India Private Limited.

SCOPE OF THE STUDY

State Bank of Hyderabad, Secretariat Branch, Hyderabad, has entrusted us the task of Conducting Techno Economic Viability study of M/S. Medi Mart India Pvt Ltd., who have approached them for financial assistance. The study is based on the

Information provided by them. Discussions we had with the promoters. Information gathered from the present market situation.We have discussed the contents of the report with the promoters who have confirmed that it does not contain any material error or fact of omission and fairly set out the state of affairs. The projections contained in the report are estimates and represent only one possible result depending upon the assumptions made. Further the projections and the underlying assumptions may vary depending upon evolving circumstances. There is no representation or assurance that the new development will achieve the results indicated in the projections as the assumptions upon which they were based are inherently subject to uncertainty and variation depending upon evolving events. However, the projections have been conscientiously prepared, based on the discussions and knowledge of the market and the information supplied to us.

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M/S. Medi Mart India Private Limited.

INTRODUCTION M/s. Medi Mart India Private Limited is a private limited company incorporated on 08-102008 by a group of people with diverse backgrounds and experience with a mission to establish a successful chain of genuine, friendly neighborhood drugstores in South India. After all necessary clearances and full fledged infrastructure setup, its first store was launched in April 2009 at V.V.Nagar, Kukatpalli, Hyderabad. As on July 2009, Medimart presently operates 20 stores across Hyderabad, and proposes to open 350 stores in south India by the end of 2014. Professional and passionate to the core, the company is moving fast forward into the future. The main objects of the Company are as follows:

To do the Business of Marketing in Medicines, Drugs, Pharmaceuticals, Cosmetics, Surgicals, Medical Instruments and Equipments in whole sale, Retail, and to set up chain stores, Marketing outlets, clinics and Laboratories. To Carry on the business of Manufacturing, buying, selling or otherwise deal in drugs, Pharmaceuticals, Medicines, Surgicals, Lab Equipments, Bio-chemicals, Organic and inorganic Chemicals, biological products, diagnostic agents, immunological agents, veterinary products, Animal foods, Cosmetics, Fine Chemicals, Dyes and Intermediates, and all kids of by Products thereof. To Export, Import, Manufacture, Purchase or Prepare for market and generally deal in merchandised of every kind and description used in Pharmaceutical, Medical, Surgical, Diagnostic and Drug Industry.

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M/S. Medi Mart India Private Limited.

PHARMACY RETAIL IN INDIA

The Indian pharmaceutical market is the worlds 13th largest in terms of value and the 4th largest in terms of volume. The total market size is US $ 5.7 bn (Ref: IMS Health) and includes all the pharmaceutical products, fast moving healthcare products and some FMCG products sold through the chemists across the country. While all the formats of retailing have changed, be it apparel retailing, grocery retailing, fuel retailing or jewellery retailing, somehow pharmacy retailing has not undergone changes. The changes in the next 5 years in this business will be more than what has happened in the past 55 years. Earlier shopping was considered a headache involving running from pillar to post. Now retailing has changed it to leisure and pleasure & its become more of an outing for the entire family. Pharmacy retailing has seen consolidation world over. 5 pharmacy chains control 40% of the sales in the US. 7 pharmacy chains control more than 60% of the market in UK. A similar situation prevails in most developed nations around the world. This is a need driven business and every family requires medicines / health related goods. So the scope of educated people getting into the same is higher. Margins are decent and returns are good. Doctors are getting into this business. An average family spends 20% of its monthly wallet spend on health care, up from 10% in 1985. Pharmaceutical Retail just got an image makeover. Much like the beauty products hitherto sold off dusty shelves promised, its a whole new look. For one, new pharmacy stores boast of excellent in store display. But thats cosmetic. What is intrinsic is that they also promise better quality, ambience, convenience and prices. So Indian customers fed-up and resigned to spurious, expired or poorly stored drugs are offered an option. The pharmacy retail sector is set for a shakeup and consolidation with many organized players investing long term in it.

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M/S. Medi Mart India Private Limited.

Some of the change is driven by market characterized by low entry barriers and capital requirements. Its a highly lucrative market with high margins that require low investment. The Rs.48, 000crore Indian pharmacy sector is dominated by the highly fragmented, unorganized players, constituting mainly the neighborhood chemist that sells medicines and OTC drugs along with other medical equipments and accessories. There are currently over 8, 00,000 medical shops serving the Indian market. Trade associations and experts opine that nearly 97 99% is dominated by unorganized sector. This is high penetration compared to other similar countries. Number of local pharmacies in India is more than that of US, Europe and China put together for a pharmaceutical market size which is less than a percentage of their combined market. When we compare with China, which has approximately 2 lakh outlets for a domestic market of $15 billion, the Indian Pharma retail with approximately 5.5 lakh retailers for $6 billion market appears highly over-proliferated. However the business and the landscape are changing. There are other serious regulatory and supervisory hurdles to be crossed before the country can really leverage the benefits of high penetration of medical shops. 1. Prevalence of spurious or counterfeit drugs is high with estimates ranging from 5% to 30% of the market. 2. Standalone medical shops are able to avoid sales tax, this being a cash business offering fake bills to regular customers. 3. The drugs are stored in sub-optimal store conditions in most places, making the efficacy of the medicines questionable.

In such a scenario, customers are patronising reputed chains wherever they operate. The organised pharmacy retail is growing at 100 % per year. Last year, chains like Medicine Shoppe grew almost by 100%. With internet being used at a much lower level in India, internet pharmacies may be the order of the day 5 to 10 years from now. This is going to bring about a big change in the customers perception, cost and service levels in pharmacy retailing.

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M/S. Medi Mart India Private Limited.

With India becoming a major destination for medical tourism, the retail medicine business cannot remain unaffected. It has to change and adopt global standards. While India can be considered as a developed country for IT, Health care and Pharma are still looked upon as developing areas. How will change happen? Corporates and organized pharmacies will have to drive the change like Apollo did in 1987 and the Dial for Health initiative by the Zydus group. The future of pharmacy retailing is in for a big shakeout from all the three stakeholders; manufacturers, retailers and customers Since all are looking at a better value for saving time, costs and delivering a better value with fast and relevant information, there could not be a better time for the changes in pharmacy retail The pharmacy market is growing at 27% annually and revenue from pharmacies is expected to touch 50,000-crore by 2010. Other experts like murlidharan Nair of Ernst & young say that the sector is growing at 15% and will double its size in the next 5 years.

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M/S. Medi Mart India Private Limited.

KEY PLAYERS IN SOUTH INDIAApollo Pharmacy: Apollo Pharmacy, a division of Apollo hospitals enterprises ltd., is Indias largest branded pharmacy network with over 700 outlets in key locations across 17 states. The pharmacy business of Apollo is growing at a phenomenal rate of 70% with revenues of Rs.600 crore achieved last year. The chain has served over one crore customers ever since they started their first store in the year1983.

Med Plus Pharmacy: Med plus is a pioneering chain of retail pharmacies based out of Hyderabad. Started in February 2006, it has already opened 500 company owned outlets spread across 6 states. The Rs.100 crore companies have set a target of opening 1000 stores by the end of this year mainly by franchisee route.

Hetero Pharmacy: Hetero Group launched its retail pharmacy chain hetero pharmacy in Hyderabad in the first quarter of 2008. Presently they have grown to 100 stores in 12 months, with 75 stores in Hyderab