PSS Herbs India: Synergy of Ayurveda & Modern Pharma for Global Healthcare/Nutrition

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An business idea with huge potential seeking investment in seed round.

The products offers $62 Billion global herbal market with high-quality and proven herbal supplements, medications and also bulk actives (APIs) for manufacture of Allopathic, Ayurveda, Siddha and Unani medications.

The advantage of investing in this company rather than any other existing company is its unique business focus. While other existing companies are not having broad look at business potential and are going blindly by old market numbers, I have precisely captured the market potential and need in each of the segments through a thorough market research. This business intelligence gives PSS Herbs India the insight to reach the market on-time with the right offering that market is looking for in the price and quantity that makes the business a success and reputable brand.

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PSS Herbs India: Synergy of Ayurveda & Modern Pharma for Global Healthcare/Nutrition

  1. 1. PSS Herbs India Business Plan
  2. 2. Mission • Be a one stop shop for a wide range of Indian herbs, herbal extracts, purified active ingredients and Ayurvedic formulations that enable holistic health. • Provide customers with the highest quality of herbs and herbal products that are ethically and organically grown. • Be recognized the world over for the inroads in research and development to leverage the combined knowledge of Ayurveda, Unani and Siddha in coming out with natural medications for disease conditions that are prevalent in the modern world.
  3. 3. The Team contd. • Vinoth Sankar - Chairman, CEO & Founder – Hands-on experience in herbal export business – Expertise on Supply Chain Management, Procurement, Manufacturing operations, Warehousing, Shipping & freight, Industrial commercial terms et al. • Supported by PSS Jeyandran, a renowned herbologist with over 50 years of trading experience in the herbal business and an authority in herbal formulations • PSS Jeyandran and Vinoth Sankar have been key contributors to the success of PSS Exports – A India based market leader with over 100 year history in the export of processed herbs • The management team comprises of domain and business experts with hands-on experience in leading the business towards success
  4. 4. The Team As of September 2013 Name Title Mr. Vinoth Sankar J Business Owner Mr. P. Jeyendran Advisory Board (Herbs/Procurement) Siddha Doc Ms. Madhavi CN TBD Dr. K. Anand Solomon TBD TBD Advisory Board (Medical Formulations) Advisory Board (Business Development & Strategy) Global Sales Head Director – Herbal Extracts & API Division Director – Nutraceuticals Division Director Division – Herbal Formulations
  5. 5. Market Summary • Multiple factors causing a major shift to herbal medicine • “Herbal treatments highly lucrative in the international marketplace” – WHO – Developing Nations: 80% population depends on traditional medicine for primary health care – Developed Countries: 70% of the population use some form of alternative medicine • Global market forecast @ US$93.15 billion by 2015 Source: Global Industry Analysts, Inc • Indian herbal exports market shows CAGR of over 20% for herbal raw materials and 25% for herbal medicines (currently at USD 0.3 B & USD 1.9 B respectively) • The industry is largely unregulated • Competing Countries: Japan and China
  6. 6. Opportunities • Lifestyle health concerns on the rise. People keen on relief/cure through herbal formulations. – Reasons for the shift towards herbal medicines: • Less expensive than medicines bought from an allopathic pharmacy • Cost effective • No serious side effects like allopathic medicines • Growing awareness on the goodness of going herbal • Therapeutic effect and medicinal benefits • High potential areas: Obesity, diabetes, heart disease, bone and joint problems. Hair loss, skin allergies and beauty products • Markets’ desperate need for trusted & high quality products. • Global markets implementing measures to control adulteration • Competition: China is a key competitor but customers are concerned about China-based products as being low on quality
  7. 7. Opportunities contd. • Geographies – US: GOI, in association with the Indian Consulate in NY has set up an Ayurveda Development Board in the US to promote herbal exports and smoothen the process – Europe: Costs less and takes less time to approve medicines as safe and effective under the "doctrine of reasonable certainty. There is NO inherent prejudice in Europe against molecularly complex plant substances. – Developing Countries: Herbal remedies are increasingly becoming important due to their affordability and effectiveness • An additional market from the competitive segment of allopathic pharma: Herbal extracts (API) widely in use in the allopathic medicines – 25% of allopathic medicines contain plant derivative - WHO
  8. 8. Opportunities • • • • contd. The legal ambiguity in Europe and the US: Marketing authorization for the nutraceutical division in the highly regulated markets In-depth herbal knowledge of PSS core team that ensures high efficiencies Environment conscious markets: PSS satisfies this by procuring from those farmers who follow scientific methods of cultivation to offer high quality produce. Internet & Social Media: – Social analytics presents great scope to understand & respond the customer needs – Marketing/sales activities generate better results with reliable visualizations about the competitor strategy, market landscape and customer expectations. – Increased business through Internet Marketing. – Relatively no/low cost promotion and international brand image
  9. 9. Business Concept • Products are grouped under different divisions based on the processing required and the manufacture process – Herbs Division: Provides dry form of medicinal herbs and culinary herbs – Nutraceutical Division: Brings out products/ supplements that have high demand – Extracts Division: New lead compounds to be developed as drugs and to valorize the traditional herbal medicinal products – OTC Division: Creates herbal remedies & phytomedicines. • A phase-wise approach to the entire business with capacity building strategy • Profitability of individual divisions based on: Efficient operations; Effective marketing; and Strong sales force
  10. 10. Business Concept contd. • Quality of manufacturing practices, product and innovation strategies & compliance • Entrepreneurial approach to facilitate personal contact, subcontracting, market access, appropriate labor pools, and access to common services. • A lower overhead/labor cost structure • Modernized to manufacture a wider range of higher quality and higher priced products for specific market segments • Long-term partnership model to offset price/quality fluctuations in international trade • Seek out niche markets that target high-end/high-value usage for PSS products
  11. 11. Business Concept contd. • Lead sales with targeted market communication activities for pharma and cosmetic manufacturers, distributors, nutraceuticals and consumers • Implement legal procedures and logistics that include packing, insurance, invoices, export documentation, etc. • All the strategies, more so the marketing strategy would be determined through market research.
  12. 12. Competition • Companies with better performance/ranking started making exports a major share of their total revenue. All others limited only to Indian domestic market • Scope for growth limited for SMEs due to lack of adequate financial funds and other resources. • Number of foreign-owned companies is relatively small, but those that are financially strong control about half of the market. • Multinational companies responding to the regional markets nutritional preferences faster than local players. • Extract manufacturers and suppliers to herbal product companies are leveraging on quality and timeliness as essential factors in being successful.
  13. 13. Competition contd. • Competitive products in Nutraceuticals segment: Fortified Cereals, Vitamin & mineral supplements, Additional supplements, Energy drinks and tablets, Foods to reduce cholesterol levels, Protein Powders, Probiotics and Sports products • Competitive products in the OTC segment: Beetroot Complex, Concentrated Cranberry, Ginkgo Plus, Garlic Plus, Ginseng, Milk Thistle Plus • Competitive OTC Brands: Vicks (VapoRub & Cough Drops), Amrutanjan (Pain Balm), Zandu (Pain Balm), Iodex (Pain Balm), Moov (Pain Cream), Itch Guard (Cream), Eno Fruit Salt (antacid), Halls (Lozenges), Dabur (Pudina Hara) etc. • Indirect competition from allopathic medications – Can be made to work as additional market opportunity for Extracts Division, since at least 25% of all allopathic medicines contain a plant derivative
  14. 14. Competitive Advantage • There is a big competitive advantage for players in developing countries like India on the due to low cost of labor for harvesting • Extensive domain knowledge of the Founder and the established name in international business • Consistent quality from locally tested herbs at the core of each product. Products standardized in order to increase their authenticity in global market • Product USP – Anti-ageing product that replaces the need for botulax based injection therapy – Phyto-protectants - chemicals from plants that are thought to confer protection against cancers and cardio-vascular disease – Herbal based probiotics
  15. 15. Competitive Advantage contd. • Cost savings by optimization at various levels makes the PSS process efficient and helps in creating products without a high markup price. • Strategic, quality-oriented domestic sourcing approach for best quality herbs at best prices • Product planning based on market research, internal R&D, competitor moves and industry changes and best practices • Market differentiation that is both geography- and product based • Operations & HR Strategy to ensure embodiment of accumulated resources
  16. 16. Competitive Advantage contd. • Core team of PSS Herbs have a long association with herbal market due to which the business is based on: – Thorough knowledge of every Indian herb & those associated with the science of Ayurveda – High level of competency in understanding herbal components, properties, benefits and risks. – A very strong network (a key PSS asset) comprising of leading suppliers, pharmaceutical manufacturers, trade associations, doctors, research associates, certifying bodies, distributors etc. • Follows a greener and cleaner environmentally friendly process
  17. 17. Goals and Objectives Short term goals • Sales goal of $120,000 during first year of operation. • Customer base of 10 companies by the end of first year • Increase sales by 15% during the 2nd year of operation. Long term goals • Expanding the manufacturing unit by adding on a new location to meet the growing orders (business to grow by 100% in the next 5 years) • International sales offices would be established in regions that have consistently shown high demand to contain costs in managing the transactions and tap into the market completely without rising the sales or operational expenses.
  18. 18. Financial Plan: Capital Expense Capital Expense Description Year 1 (In USD) Land 25000 Plant Setup 1016609 Machinery for Manufacturing 4293424 Permits, IPR and Legal Grand Total 27108 5362141
  19. 19. Financial Plan: Operating Expense Operating Expense Description Year 1 Year 2 Year 3 Year 4 Year 5 (In USD) Plant Operating Cost 104500 175333 229333 229533 314167 Total Manpower Expenses 74907 182673 261037 263493 265693 Marketing & Selling Expenses 32942 85955 126393 195687 280162 212349 443962 616763 688714 860022 5574490 443962 616763 688714 860022 536214 536214 536214 536214 536214 0 6777 6777 6777 6777 Operating Expense Total Expense Depreciation Machinery (Straight line Method @ 10%) Amortization
  20. 20. Financial Plan: Sales Revenues SALES REVENUES Divisions Year 1 Year 2 Year 3 Year 4 Year 5 (In USD) Herbs Division 96940 472848 971129 1147633 1262396 Extracts Division 23275 446398 1142736 2397682 4656115 Nutraceutical Division 0 184763 599870 1631238 4060716 OTC Products Division 0 160413 571444 1590305 3696974 Total 120215 1264421 3285179 6766858 13676201
  21. 21. Financial Plan: Revenue Growth Rate (%) REVENUE GROWTH RATE (%) Divisions Year 2 Year 3 387.77 105.38 18.18 10.00 1817.93 155.99 109.82 94.19 Nutraceutical Division 224.67 171.93 148.93 OTC Products Division 256.23 178.30 132.47 Herbs Division Extracts Division Year 1 Year 4 Year 5
  22. 22. Financial Plan: Breakeven Analysis & Profit/Loss Analysis Breakeven Analysis (Simple Method) Cash flow from Operations -327256473 49227579 160104943 364688680 768970741 Cumulative gross income -327256473 -278028894 -117923950 246764730 1015735471 Breakeven at 3 Years 5 Months Profit & Loss Analysis Gross Income Depreciation & Amortization EBIT Interest(100 % equity) EBT -327256473 49227579 160104943 364688680 768970741 32172848 32579463 32579463 32579463 32579463 -359429321 16648116 127525480 332109217 736391278 0 0 0 0 0 -359429321 16648116 127525480 332109217 736391278 4994435 38257644 99632765 220917383 TAX 30% Net Income -359429321 11653681 89267836 232476452 515473895 Cumulative Net Profit -359429321 -347775639 -258507803 -26031351 489442544 All numbers in INR
  23. 23. Capital Requirements • The financial requirement for establishing and expanding the business is $8.18 Million
  24. 24. Risks and Rewards • Being an elaborate manufacturing setup, investment tends to peak in the initial year. • Phased approach helps in realizing the revenues early and to achieve the breakeven by fully utilizing the interdependencies of the divisions to the company’s advantage. • Value of the investment grows owing to the market penetration, IPR, market intelligence driven initiatives. • A system-based approach is prosposed to business risk management.
  25. 25. Risks and Rewards: Benefit for the Investor • PSS Herbs India is a total return investment venture that is planned to provide high dividends along with the potential for moderate, long-term capital appreciation. • PSS Herbs has a medium equity market capitalization, the returns are comparable to other small to mid-sized companies. • Management is willing to negotiate any structure which suits the investor. The company is seeking an equity investor. • Management will provide a seat on the company's board of directors. • Investor will enjoy ROI in excess of that of alternative investments, as a privately held company, while providing investor liquidity of their investment by taking the company public at its earliest opportunity. Note: According to Euromonitor International, India is becoming an attractive destination for investments in this sector.
  26. 26. Thank you Vinoth Sankar Mobile: ++ 91 94884 24951 (India) & ++971 50 860 207 9 (UAE) vinoth7777@gmail.com Skype: vinoth7777 Twitter: @PSS_Herbs_India http://www.pssherbsindia.com

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