Pharmaceutical firms have registered the highest ever growth in net profits during the quarter ended June 2002. The 35 top pharma companies clocked a 70 per cent rise in net profits on a 21.48 per cent increase in sales.
This performance has been leveraged by several cost cutting measures. The aggregate pre-tax profit of the 35 companies rose by Rs 360.68 crore to Rs 807.12 crore while the savings from cost cutting is estimated at around Rs 328.62 crore.
The reduction in customs duty on imported raw material from 35 per cent to 30 per cent in the Union budget for 2002-03 was a shot in the arm for these firms.
More From This Section
The ratio of raw material costs to sales was down from 48.32 per cent in the quarter ended June 2001 to 44.12 per cent in the quarter ended June 2002. The savings on this account is estimated at around Rs 209 crore. Similarly, interest costs declined by 21.4 per cent and the savings on this account was around Rs 80 crore.
Even though expenditure on salaries and wages rose by 12.48 per cent, the cost on account of salaries and wages was down by Rs 38 crore in the June 2002 quarter as sales grew at a faster pace.
The savings have been worked out as the difference between the costs arrived at by using the April-June 2001 cost-sales ratio for the April-June 2002 quarter sales.
The top 10 pharma companies have logged a sales growth of 26.1 per cent compared with a sales growth of 13.62 per cent by the 25 other companies. However, the top 10 firms registered a 55.2 per cent rise in net profit compared with the 445 per cent growth by the remaining 25 companies.
The multinational pharma companies too performed well with a sales growth of 15.2 per cent and net profit rising 55.3 per cent.
The cost cutting has also led to an improvement in profit margins. The profit margins before tax and interest soared from 15.50 per cent during April-June 01 to 19.05 per cent in April-June 02.
Of the 35 companies, 26 firms have increased the PBIT margins while the other nine have recorded a decline.