Key strengths and weaknesses. 1 Healthy growth of revenues from the African markets 2 Good brand recall in India for popular OTC products

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1 Pharma Bliss GVS Pharma Limited (56197) Corporate Analysis Financial Data Issuer INRm FY11 FY1 Revenue 2, ,688.7 Growth 29.6% 27.% EBITDA EBITDA Margin (%) 24.3% 27.% EBITDA/ Net interest 24.7x 22.2x PAT PAT% 18.5% 24.7% EPS Source: Company annual report Business summary Bliss GVS Pharma Limited (Bliss) derives 9% of its revenues from exports of antimalarial products to African countries. For the Indian markets it manufactures a range of over-the-counter (OTC) and prescription products in the female contraceptives, soft pessaries and suppositories segments. Bliss also manufactures a wide range of other pharma products and dietary supplements. In the financial year ended March 211 (FY11), its revenues grew by 29.6% yoy to INR2,188m, underpinned by increasing demand from African countries. The company s revenues have grown at a 29% CAGR since FY8, while its PAT margins have been on a declining trend primarily due to withdrawal of tax benefits. This has resulted in tax provisioning percentage rising to 23.5% of pre-tax income in FY11 from only 4% in FY8. Shareholding Inside ring: FY11 Outside ring: FY1 33% Promoters Others Key strengths and weaknesses Key strengths 1 Healthy growth of revenues from the African markets 2 Good brand recall in India for popular OTC products Key weaknesses Stability of Governments and policy in African countries Exposure to foreign currency risk 36% 64% Source: Fitch Source: BSEplus Peers 67% Revenue (INRm) FY11 FY1 Indoco Remedies Ltd 4, ,31.9 Venus Remedies Ltd. 3, ,119.3 Lyka Labs Ltd. (Y.E. Sept.) ,186.7 Bal Pharma Ltd. 1, ,81.4 Natco Pharma Ltd. 3, ,912.4 Themis Medicare Ltd. 2, ,133.2 Source: Fitch, Bliss GVS Pharma Ltd. Market data 27 July 211 Shares outstanding (m) 13 Face value 1 Market cap (INRm) 2,5 52-Wk H/L 47./2.2 CMP 24.3 Analysts Avinash Lodha avinash.lodha@fitchratings.com Financial History (INRm) FY11 FY1 FY9 FY8 Revenues 2, , , ,26.6 EBITDAR% 26.8% 3.2% 34.7% 41.3% PAT% 18.6% 24.7% 28.2% 32.1% EPS (basic, INR) Cash and liquid balances 1, Total Gross Debt (unadjusted) Free Cash flow 34.9 (16.4) 49.2 (3.5) Source: Fitch, Company Annual Reports Return Analysis Margin Trends (%) 5% 4% 3% 2% 1% % EBITDAR PAT Avg EBITDAR FY1 FY4 FY7 FY1 Source: Prowess, Fitch Ratings Return Analysis (%) ROE ROCE FY8 FY9 FY1 FY11 Source: Company reports, Fitch Asset Turns (x) 2 1 FY8 FY9 FY1 FY11 Source: BSE Plus, Fitch Bliss GVS Pharma Limited (56197) September 211 1

2 Background Incorporated in 1984 by Mr Shibroor Kamath, Bliss is a pharmaceutical company, listed on both the Bombay Stock Exchange and the National Stock Exchange. Its manufacturing facility is located in Palghar - an industrial town near Mumbai. Mr Kamath along with his family owned a 63.84% stake in Bliss as of 31 March 211. Shareholding Pattern as on 31 March 211 Shareholding Structure Particulars Shareholding (%) Promoters 63.8 Public shareholding Institutions 2. Non-institutions 34.2 Total 1. Source: BSE Bliss generates around 9% of its revenues from anti-malarial products which it exports to African countries. Domestically, It is known for its popular vaginal contraceptive brand Today. Revenue FY1 Trading 2% Health care 2% Revenue FY11 Trading 6% Health care 1% Pharma 96% Pharma 93% Source: Company reports, Fitch Source: Company reports, Fitch Management Board of Directors Govind G Desai Shibroor N Kamath Gautam R Ashra Dr Vibha N Kamath Shruti N Kamath Mayank Mehta Chairman Managing Director Director Whole-time director Whole-time director Independent Director (from May 11) Bliss s board consists of six members, including Mr Kamath (MD) and his two daughters (Directors), Mr Govind G Desai (Chairman, co promoter) and Mr Gautam R Ashra (co-promoter). Mr Ashra also holds directorships in a number of other companies, the prominent of which are Bajaj Hindustan, TVS Infrastructure Ltd., Bombay Gymkhana Ltd. and Ashtavinayak Enterprises. Business Overview Bliss s pharma segment, which is primarily comprised of the anti-malarial drug exports to African countries, contributes more than 9% of its revenues. Bliss GVS Pharma Limited (56197) September 211 2

3 Domestically, Bliss is a prominent player in the female contraceptive and pessaries market led by its popular brand Today. It has a strong network of stockists and its products are sold all over India. Industry Analysis According to the 21 WHO malaria report, 86% of the world malarial deaths occur in Africa out of the 16 countries which have reported cases of malaria. WHO has taken up the task of reducing malarial deaths and its Malaria Programme is driving the availability of anti-malarial drugs in Africa. Indian pharmaceutical industry grew to INR717bn (USD16bn) in 211 from INR613bn (USD13.4bn) in 21; +16.9% in INR terms and +19.9% in USD terms (Source: Financial.tmcnet.com). Higher education levels and increased awareness are expected to promote the use of contraceptives. Key growth drivers in the domestic pharma market include: growing penetration in the rural market, changing disease profile and rising expenditure on healthcare. The recent acquisition of Paras Pharma at 8x (Enterprise value/sales) by Reckitt Benckiser points towards the attractiveness of the Indian pharma market and Indian pharma companies to global pharma giants. The deal comes on the back of Abbott acquiring Piramal Healthcare in May 211 for a deal size of USD3.7bn and Daiichi Sankyo acquiring Ranbaxy Laboratories for USD4.6bn in June 28. Interest of global companies in acquiring Indian drug firms is further indicated by Mylan acquiring Matrix Laboratories for USD736m in January 27 and Sanofi Pasteur acquiring Shantha Biotech for USD78m in July 29 Working capital is expected to remain a concern, especially for the smaller entities. Fitch has maintained a stable credit outlook on the Indian pharmaceutical industry. Management Strategy Over the last three years, Bliss has spent only INR3m in capex i.e. just 6% of revenue. The company has not disclosed its plans for further capital expenditure. Bliss has invested INR17m to set up a JV named Bliss Indasi Life Sciences Pvt. Ltd. in Kuwait for suppositories manufacturing. This will provide the company entry into the Emirates market. Bliss has also incorporated a 1% subsidiary Bliss GVS International PTE Limited in Singapore to oversee its exports business. The management expects its female contraceptive segment to contribute increasingly to the top-line with increasing education and awareness levels in the Indian society. Financial Analysis Growth and profitability Bliss has grown at a 15% CAGR over FY6-FY11, underpinned by the increase in supply of anti-malarial drugs to African countries. However, the CAGR has slowed down to 29% over FY8-FY11. The revenues increased to INR2,188m in FY11from INR1,24m in FY8. Seasonality in its business has led to Bliss s Q3 revenue growth slowing down for the last two years. Its EBITDA margins in Q4 have also been low for FY1-FY11. In FY11, 93% of Bliss s revenue came from its pharma segment (FY1: 96%). Trading and healthcare contributed to the remaining 7%. Bliss GVS Pharma Limited (56197) September 211 3

4 Quarterly Revenues and Margin Trends (INRm) Revenues EBITDA (%) 45% 4% 35% 3% 25% 2% 15% 1% 5% % Sep'8 Dec'8 Mar'9 Jun'9 Sep'9 Dec'9 Mar'1 Jun'1 Sep'1 Dec'1 Mar'11 Source: BSE, Fitch Leverage and Capital Structure Bliss is mostly financed by equity (debt is 4% of capital employed). Promoters hold two thirds of the equity. Bliss has a very comfortable financial leverage position - total adjusted debt was only 15.5% of EBITDA in FY11. Its net debt is negative with a cash balance of INR18m and a total debt of INR82.4m at FYE11. Interest coverage in FY11 was very comfortable at 24.7x. Working Capital/ Cash Flow analysis Bliss has constantly had positive cash flow operations (CFO) and fund flow from operations (FFO) for the last three years. Its free cash flow (FCF) has been marginal due to the high dividend payment policy (dividend rate of 6%, 5% and 15% over the last three years) of the management. Bliss paid INR96.5m in dividends in FY11. The current dividend yield is 2.8% (CMP of INR21.5 as of Aug 24, 211). Bliss has substantially reduced its cash conversion cycle in FY11 to 147 days from 211 days in FY1 due to a substantial reduction in its inventory holding period to 26 days from 96 days during the same period. Cash Flows FFO CFO FCF (INRm) FY8 FY9 FY1 FY11 Source: Bliss reports, Fitch Working Capital Cycle (Days) Collection period Inventory period Payables period FY8 FY9 FY1 FY11 Source: Bliss reports, Fitch Return and Asset Efficiency Analysis Bliss return on capital employed (RoCE) declined to 35% in FY11 from around 56% in FY8 primarily due to an increase in raw material costs (as a percentage of revenues) to 58% from 44% during the same period. Its asset turnover ratio (revenues/total assets) in FY11 remained unchanged at 1.2x. Bliss GVS Pharma Limited (56197) September 211 4

5 Annex 1: Financial Analysis Summary Financial Summary INRm FY11 FY1 FY9 FY8 Income Statement Revenues 2, ,689. 1, ,23.7 Revenue Growth EBIT Interest Expense Net of Interest Income Net Income Balance Sheet Cash and Equivalents Total Assets 2, ,59.1 1, Short-term Debt Senior Long-Term Debt Subordinated Debt Total Debt Off-Balance Sheet Debt Total Adjusted Debt Preferred Stock + Minority Interests Common Equity 1, , Total Adjusted Capitalisation 1, , Cash Flow Operating EBITDAR ("Op. EBITDAR") Cash Interest Paid, Net of Interest Received Cash Tax Paid Associate Dividends Other Changes before Funds From Operations Funds from Operations Working Capital Cash Flow from Operations Non-Operational Cash Flow Capital Expenditure Dividends Paid Free Cash Flow Receipts from Asset Disposals Business Acquisitions Business Divestments Exceptional & Other Cash Flow Items Net Cash In/Outflow Equity Issuance/(Buyback) FX movement Other Items Affecting Cash Flow Net Cash Flow Available for Financing Closing Net Debt Profitability Op. EBITDAR/Revenues (%) EBIT/Revenues (%) PAT/Revenues (%) Ratios Asset turnover ratio (x) 1.18x 1.18x 1.22x 2.26x Current asset turnover ratio (x) 1.65x 1.62x 1.64x 2.91x Op. EBITDAR/Net Fixed Charges (x) 24.67x 22.23x 15.69x 25.74x Net adjusted Debt/Equity (x) -.6x -.5x -.7x -.8x Net adjusted Debt / Op. EBITDAR (x) -.18x -.17x -.12x -.7x ROCE% ROE% Growth Op. EBITDAR (%) EBIT (%) Net income (%) EPS (%) Per share data Number of common shares (mn) EPS DPS Dividend payout ratio (%) Source: Bliss reports, Fitch Bliss GVS Pharma Limited (56197) September 211 5

6 Annex 2: Share Price and Volume Data Stock Price Movements (Indexed) BSE SMLCAP () (LHS) Bliss price (RHS) 3, 6 2,5 5 2, 4 1,5 3 1, Jan 1 Apr 1 Aug 1 Dec 1 Apr 11 Jul 11 Source: bseindia.com, Yahoo Finance Price Volume Chart (Prices) Bliss vol (RHS) Bliss price (LHS) (Volume s') 9 1, Jan 1 Apr 1 Aug 1 Dec 1 Apr 11 Jul 11 Source: BSE, Yahoo finance Valuation Comparison (as at 27 July 211) Bliss Indoco Natco Themis Venus BSE 2 P/E (x) Price/book (x) Dividend yield (%) 2.49% 1.85%.72% 2.1% 1.2% 1.31% Source: Moneycontrol, BSE Bliss GVS Pharma Limited (56197) September 211 6

7 Annex 3 Recent Financial Results INRm Q4FY11 Q3FY11 Q2FY11 Q1FY11 Net sales / income from operations Expenditure (excluding depreciation and amortization) EBITDA Depreciation and amortization Operating EBIT Other income Profit before interest Interest Profit before tax Tax (expense)/ credit Net profit / (loss) EBITDA margin 1.7% 33.1% 34.9% 34.1% EBITDA/interest 9.4x 29.4x 58.7x 28.2x Source: BSE India website Bliss GVS Pharma Limited (56197) September 211 7

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