Cupid Q4FY17 Concall Summary


Financial Highlights

  • FY 2017 has been the best year for the company with a net profit of Rs. 20.5 crores during the year
  • Total Revenue of Rs. 85 crores from female condoms
  • The third quarter sales were about Rs. 28 crores and fourth quarter is about Rs. 18 crores
  • EBIDTA Margin: Female condom- 50-55%, Male condoms- 15% and lubricants- 40%
  • Revenues: 5% from lubricants, 52% female condoms and 43% male condoms
  • Ad Spend of around Rs. 70 Lakhs including events to sponsor and popularize Cupid products especially female condoms
  • Expected Ad spend of Rs. 7 crores this financial year and target projected sale of Rs. 97 crores next year
  • Expected 15% to 20% increase in revenue year-over-year
  • Rs. 19 crores in cash for promotion, development of new products and other activities
  • No debt due to possible plans of acquisition ranging from Rs. 20-40 crores
  • No impact of GST as condoms are completely exempt
  • Expected Rs. 10 crores sales via retail channel in 2018 with 40% working capita
  • Revenues of second and third quarter are always better than that of first and fourth quarter
  • Promoters holding has fallen from 48% to 44% due to selling of some shares
  • 33% increase in dividend as dividend moved up from Rs. 3 to Rs. 4
  • Capacity for male condom is about 325 million pieces and we are planning to add about 80 million more which is 20% of our overall capacity of 400 million total male and female
  • CAPEX plan of Rs. 7 crores: Rs. 4 crores for the imported machinery and another Rs. 3 crores to build up the infrastructure facilities
  • Other expenses increased from Rs. 9 crores to Rs. 16 crores due to increase in advertising, salary and power cost
  • Assured orders of almost Rs. 89 crores to be spread over a period of 15 months
  • Using hedging techniques to protect from Dollar fluctuations
  • Volume: about 17.5 million for female condoms and 202 million male condoms for FY17
  • Expected volume: Around 20 million for female condoms and about 250 for male condoms for FY18
  • Major raw material Latex prices vary within a band of (+/-10%)
  • Inventory of Rs. 45 lakhs to Rs. 50 lakhs, which is about four-week supply
  • Receivables vary between Rs. 8 crores and Rs. 14 crores
  • Rs. 1 crore allocated spend for R&D

New products

  • Launched water based lubricant product which is the third product in the basket beside male condoms and female condoms
  • Developed an unique male condom which is patented all over the world which would be launched this year
  • Developing a second-generation high-tech female condom
  • Already manufactured and marketed hand sanitizer with unique features
  1. For hand sanitizer, retail marketing in India and export especially in the Sub-Saharan African countries
  2. Margin for hand sanitizers is 35-40%
  3. Points of Differentiation: competitive price, added feature of moisture retention and various colors and flavours
  • Developing a vaginal cream to enhance pleasure with no adverse side-effects
  • Working on a product to resolve the problem of premature ejaculation
  1. Kind of a wet wipe or tissue wipe
  2. $400 million dollar market in US and a US company with patent approached to distribute it in India
  3. Option to manufacture in India and even export to other counties
  4. Manufacturing facilities in India would be set-up in next financial year 

Future prospects and plans

  • Initiated a brand promotion for retail business
  • Already sold products in 220 cities all over India and plans to extend it to about 1,000 towns and cities in next three years via online channel
  • Rs. 58 crores worth of confirmed orders and additional Rs. 31 crores worth of repeat orders expected from our customers
  • Plan to raise about Rs. 25 crores out of which about Rs. 11 crores to be used for brand promotion program throughout India
  • Working on the appointment of CEO for the company
  • Plans to expand the facilities and production capacity by about 20% in this coming year
  • South African existing contract of Rs. 104 crores for three-year will come to an end in June, 2018 so new tender will be floated in December, 2017
  • There is no price increase clause in existing contract however it might be added in next one
  • Sales and Distribution network currently in Bombay, Thane, Pune, Bihar, U. P., and Haryana which will be extended to Rajasthan, Gujarat and Kolkata
  • Business plan is to extend a credit for maximum 30 days with PDC and increase working capital by Rs. 3 crores
  • Growth prospects as 65% of the population in India is below the age of 35 years and the company has competitive products
  • Expecting orders in June with tender from Ministry of Health
  • Additional capacity will be operation from second half and revenue would start from fourth quarter
  • Due to price limitation in India for condoms, the margin is less so focussing sales and marketing outside India
  • Advertisement through Newspaper Ads, digital marketing and sponsorship of events

Female condoms

  • The company has a design patent on female condom and is user-friendly
  • Plans to get female condoms registered with USFDA to get a revenue of $2 per piece against current revenue of $0.40
  • The main competitor is Female Health Company which is the only manufacturer approved by USFDA
  • Registration would cost $2 million and will take 2 years approximately
  • Clinical study to be undertaken to prove the safety of product
  • To be sold as B2C brand and supplying to other brands as well
  • Will require another three months before selling on retail outlets as distribution network needs to be set up
  • Rs. 52 crores of sales to top three customers: Rs 40 crores to Government of South Africa and the rest Rs. 12 crores to WHO, UNFPA and an International NGO Population Services Inc.
  • 80% of our Rs. 85 crores sales last year was from export and balance 20% from domestic
  • Rs. 15 crores worth of FC is to be delivered between April and June 2018
  • The Company’s female condoms are graded superior than the Female Health Company condoms.
  • Will get help from Mr. Colin Pollard who was the Director of FDA for Reproductive for clinical trials