Ranbaxy Laboratories, the country’s leading drug-maker, today disclosed that it made a mark-to-market (MTM) loss of Rs 908.6 crore for the quarter ended June 2008 on its foreign exchange hedges.
The company, however, is sitting on a net gain of Rs 117.6 crore after posting gains of Rs 1,026 crore on the underlying instrument (future sales). If the depreciation of the rupee resulted in an MTM loss on the derivatives contracts, the company could earn more for every dollar on its future sales (underlying).
“The MTM loss does not hit its profit and loss account. It will debit it to the head reserve account on the balance sheet and credit derivatives (as a liability) to the bank. When the cash flow is realised, it can bring the gains to the books,” said a Mumbai-based foreign exchange consultant.
The company has also reported a net foreign exchange loss of Rs 173 crore for the quarter under review, which saw its net profits plunging 91.3 per cent to Rs 22.9 crore against Rs 266.2 crore for the corresponding quarter last year.
Excluding foreign exchange losses of Rs 193 crore for the current quarter and a forex gain of Rs 201 crore for the corresponding quarter last year, the profit growth at Rs 160.1 crore was flat.
Earnings per share on a fully-diluted basis were Re 0.61 as against Rs 4.23 for the corresponding quarter in 2007.
Net sales for the quarter was Rs 1,812 crore, a growth of 13 per cent against Rs 1,623.8 crore for the corresponding period of the previous year.
“The sales growth was in line with expectations. On the operating front, Ranbaxy reported an 260 improvement of basis points in its operating margins. This was well above our expectations,” said Sarabjit Kaur Nagra, vice-president, Angel Trading.
In a press briefing, Ranbaxy Chairman and Managing Director Malvinder Mohan Singh said the company will record a stronger performance during the second half of the year. He also felt the complementary strength of Daiichi Sankyo and Ranbaxy will reflect in more business growth for the company.
The Ranbaxy stock declined by 3.48 per cent to close at Rs 474.8 on BSE today.
