Ranbaxy posts loss on writeoff, rupee slump
Oct 29 2013 , Mumbai
However, total income of the company rose to Rs 2,827.73 crore for the quarter from Rs 2,774.23 crore in the year-ago period.
Net sales rose to Rs 2,750.17 crore compared with Rs 2,668.52 crore in the same period last year.
“The rupee depreciation against the US dollar, though favourable for export businesses, had an adverse impact on us mainly on account of application of the accounting standards that require marking to market the entire derivatives and foreign currency-denominated loans outstanding,” the company said in a statement.
“There was a charge of Rs 360 crore during the September quarter (the company follows calendar year for financial year) of 2013 and Rs 760 crore year-to-date on account of the forex items mentioned above. The company made a provision for the Mohali stock write-off as well as other costs amounting to Rs 70 crore,” the statement said.
The Gurgaon-based company’s Mohali unit received an import alert from the US Food and Drug Administration (FDA) in September for violation of good manufacturing practices (GMP). Earlier in 2009, the firm had received import alerts for its Dewas (Madhya Pradesh) and Paonta Sahib (Himachal Pradesh) facilities. All these plants, which produce drugs for the US market accounting for 40 per cent of Ranbaxy’s total sales, are now barred from shipping to the US.
Ranbaxy has paid a fine of $500 million to the US department of justice for alleged malpractices in documentation on the manufacturing process, and has signed a consent decree (CD) with the US FDA to become compliant with the regulations.
Also, the company recently received FDA clearance for its US facility, Ohm Laboratories. The clearance will allow the company to file applications for approvals for generics from that facility for the US market.
Japan’s Daiichi Sankyo owns 63.5 per cent in Ranbaxy. The company’s board on Tuesday decided to change Ranbaxy’s financial year from April to March with effect from April 1, 2014. In view of this, the ongoing financial year (January-December) will be for a period of 15 months — January 2013 to March 2014, the company added.
CEO and MD, Arun Sawhney said Ranbaxy was confident of increasing quality standards and manufacturing processes satisfactorily to uphold the highest level of trust that doctors, patients, regulators and other stakeholders expect from it. In an analyst conference, Sawhney said Ranbaxy would continue to focus on branded markets in Asia, Eastern Europe, CIS and Africa.
“In India, however, the new pricing policy caused some uncertainty, and our sales in the home market faced some disruptions,” he said. He didn’t quantify the impact.
On the outlook, the company said it expected to achieve Rs 13,000-Rs 13,500 crore sales during the 15 months ending March 31, 2014. “This does not consider any sales accruing from first-to-files (FTFs), which shall be accounted for as and when they materialise,” the company said.
Sawhney said the remedial expenses, which are largely on appointing consultants to sort out issues involving its three units facing FDA alert, would taper down from 2015 onwards. The remedial cost is likely to have an impact on the ebitda (earnings before interest, tax, depreciation and amortisation) margin. The ebitda stood at Rs 200 crore for the September quarter.
“The Ohm facility is already overcrowded and the cost structure is also different from India. Since the wages and operational costs are high compared with the Indian facilities, this will see a rise in costs, which will impact margins. The remedial measures taken for the US market and the pricing policy in the domestic market have impacted margins of the company,” said Centrum Broking, analyst, Ranjit Kapadia.