Decline in domestic, export sales push company in the red.
Hyderabad-based Aurobindo Pharma Limited reported a consolidated net loss of Rs 80.16 crore for the quarter ended September 30, 2011, as both domestic and export sales dwindled among other factors. The company reported a consolidated net profit of Rs 198.32 crore in the comparable quarter last year.
Net sales for the quarter declined 3.35 per cent to Rs 1,075.3 crore as compared with Rs 1,112.62 crore in the corresponding quarter last year while expenditure grew close to 12 per cent to Rs 1,006.89 crore from Rs 899.11 crore.
The consolidated financials include results of all the subsidiaries and joint ventures. During the quarter, Aurobindo Pharma (Bulgaria), a stepdown subsidiary of the company, was liquidated and ceased to be a subsidiary, it informed the stock exchange.
Explaining the reasons for the disappointing performance, company chairman Ramprasad Reddy said: “The first half of the current fiscal has been challenging on account of lower formulation sales, full impact of the US FDA alert on our Unit VI Cephalosporin manufacturing facility, subdued demand environment in Europe, disruption in operations due to regional unrest and notional loss on restatement of foreign currency borrowings. We are confident to deliver on better operational performance in the coming quarters with profitable sales mix.”
Sales from formulations declined 9.5 per cent to Rs 591.9 crore from Rs 615.7 crore even as APIs registered a 9.9 per cent growth in sales to Rs 490.1 crore (Rs 451.7 crore in the corresponding previous quarter).
In the API business, the company improved its performance only on the anti-retro virals (ARVs) front reporting a 98.7 per cent jump in sales to Rs 169.5 crore while others, including Cephalosporin, declined 6 to 17 per cent.
More From This Section
During the quarter, the company, however, registered a net foreign exchange gain of Rs 185,42 crore as compared with a Rs 76.19 crore loss.
It said the outstanding zero coupon foreign currency convertible bonds of $139.20 million, issued in May 2006, were paid in entirety on maturity on May 17, 2011, along with the redemption premium amounting to Rs 319.86 crore. The redemption premium was charged to profit and loss account for the half-year period ending September, 2011.
Aurobindo scrip on Tuesday closed at Rs 123.25 on the BSE, down Rs 5.15 (4.01 per cent) over the previous day's close of Rs 128.4.
Not to embark on rejig
Aurobindo’s board, which analysed the presentations made by the company's restructuring committee, has decided to stick to status-quo and not embark on any restructuring exercise at the current juncture.
The committee, which was formed by the company's board, anyalysed various aspects with regard to the proposal about segregation of API (active pharmaceutical ingredients) and formulations business into two separate entities.
Aurobindo informed bourses that after careful consideration of the presentations, its board had “concluded that at the current juncture, it would be best to keep it status quo and not attempt any segregation by way of restructuring and lose the operational economies of combined entity in the interest of maintaining/maximising shareholders wealth.”
The company, however, said business dynamics might change in future, which may become attractive for it to re-consider about restructuring.
Among other things, the committee was stated to have examined factors like the underlying business, loss of diversification, share market index weightage, shareholders liquidity, impact on funding costs and risks.