Amar Remedies Ltd - 31.00 Rs

Established in 1984, Amar Remedies Ltd (ARL) was originally promoted by Mr. P. Shah as "Swami Aushadhalaya Private Limited” to develop ayurvedic medicines. In the year 1988, it made its first breakthrough in oral care products with the development of an ayurvedic toothpowder. Two years later it developed and launched an effective ayurvedic vegetarian toothpaste (i.e. gelatine-free formula), which is the only toothpaste of its kind. Subsequently, it research and developed several different ayurvedic medicines and even got it approved from FDA. In 2001, ARL developed and commercially launched two healthcare products namely AMAR Get-Up - a pain relieving ointment and AMAR Balm for cold, headache & body ache. Since then ARL has established itself as one of the well known manufacturer of ayurvedic, herbal and cosmetic dental care, personal care, skin care, beauty care & health care products like tooth paste, toothpowder, shampoo, creams, lotions, shaving gel, balm & pain relieving ointment. Infact, it boasts of making twenty different variants of toothpaste under 12 brands for sale to intermediate traders for export and nine variants of toothpaste under 3 brands for the domestic market. But importantly till now, ARL has successfully developed 24 different ayurvedic and herbal medicines and have also obtained the FDA approval for the manufacture and sale of these medicines, which include medicines for hypertension, diabetes, and heart ailments.

ARL has two manufacturing facilities located at Surat & Daman. The Surat plant basically manufactures ayurvedic and herbal medicines whereas the sophisticated Daman plant manufactures tooth paste and other FMCG products. Last fiscal, company expanded the installed capacity of oral care and health care from 12400 MT and 595 MT to 13400 MT and 645 MT respectively at its Daman plant. As a part of its expansion plan, company has recently set up a new state of the art manufacturing plant spread over 1 Lac sq. feet of constructed area at Dehradun in Ultaranchal. It has installed ultra modern machinery, to manufacture FMCG & ayurvedic products. It has also set up a complete integrated R&D and quality control department to ensure enhancement of quality of existing products & development of new products. But it is unable to commence commercial production due to delay in obtaining permission from pollution control authorities. However it will get the clearance certificate sooner than later and the plant is expected to start in next couple of months. Once fully operational it will give a good fillip to company’s topline as well as bottomline. Notably, ARL has appointed 13 super-stockists for domestic sales who in turn have more than 700 sub-stockists spread in western, northern, and eastern regions of India. Besides, it has recently selected 2 super-stockists who in turn have 130 sub-stockists in the southern region and are yet to contribute to turnover. Meanwhile, after capturing a major share of the Indian domestic market, ARL has started tapping the international potential of FMCG markets. It is currently exporting to over various countries across the globe from Europe through Middle East & from Asia to Far East countries. Accordingly it is contemplating to form a wholly owned subsidiary at Ras-AL-Khaimah-Free Trade Zone, UAE.

To protect the intellectual property, ARL has offlate applied for trade mark registration for 9 toothpaste brands. And it intends to apply for process patent of all 24 ayurvedic medicines after commencement of their commercial production. For future growth, ARL’s focus is to change the perception of consumers towards ayurveda from an age-old science to a remedy for various new age ailments and diseases by changing the delivery system of the medicine. It also propose to start a unique concept of consultation over toll free phone lines for ayurvedic treatment thru sales and service offices in select cities of India. Financially, for FY08 ending June 2008company is expected to register sales of Rs 300 cr and PAT of Rs 20 cr i.e. EPS of Rs 8 on equity of Rs 26.20 cr. And for FY09, it has the potential to post an EPs of 10~11 Rs. Considering its all time H/L of Rs 102/26 and commencement on Dehradun plant in near future, this is one of the cheapest scrip trading at a P/E multiple of hardly 3x times against FY09 earnings. Investors are strongly recommended to buy at current levels as it can easily appreciate 50% in 9~12 months

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