Pharma majors recover as VAT confusion is over

It has been a major turn around for the domestic pharmaceuticals companies, which posted huge losses in the last quarter of the last financial year due to the uncertainity over the implementation of VAT.

Most of the pharma majors have reported substantial rise in their bottomline, recovering lost sales on account of confusion over the implementation of VAT. Few among the pharma major, that were worst-affected by uncertainties over VAT implementation include Ranbaxy, Nicholas Piramal and Sanofi Aventis, amongst others.

Ahmedabad-based pharma major, Torrent Pharmaceuticals Ltd (TPL) has reported a consolidated sales of Rs 221 crore for the June quarter as compared to Rs 144 crore in the corresponding quarter last year, an increase of 53 per cent.

The growth drivers were recovery of the loss of sales in the previous quarter due to implementation of VAT in domestic business.

"Our domestic formulations business recorded a jump of 33 per cent in the first quarter. We completely recovered lost sales on account of uncertainties related to implementation of VAT in the last quarter," Sanjay Dalal, executive director, TPL said .

Even for Cadila Healthcare Ltd the domestic formulation growth of 13 per cent was reported, which was partially due to restocking benefit of VAT. According to Pankaj Patel, chairman-cum-managing director, CHL, the sales that the company has recovered due to VAT in this quarter is to the extent of about Rs 23 crores.

"Most of the pharma companies have posted better results in this quarter as compared to the last quarter. Basically, recovery of VAT losses is the principal component reflected the companies top line," said Sunil Parekh, advisor, CRISIL.

Similarly, J B Chemicals and Pharmaceuticals Ltd has achieved net sales of Rs 94.62 crore for the first quarter as compared with Rs 70.98 crore for the like period last year, registering an increase of 33 per cent.

"We have recovered most of the VAT losses in the first quarter of the current financial year. Our profit after tax (PAT) stood at Rs 11.81 crore as compared Rs 10.27 crore in the same quarter of the last financial year, an increase of 15 per cent. The outlook of the company is positive in the coming quarters," said Kamlesh Udani, executive director, technical and production, JBCPL.