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Divis Laboratories Ltd.

BSE: 532488 Sector: Health care
NSE: DIVISLAB ISIN Code: INE361B01024
BSE LIVE 15:40 | 23 Aug 638.95 8.70
(1.38%)
OPEN

635.85

HIGH

643.30

LOW

626.80

NSE 15:56 | 23 Aug 638.40 9.20
(1.46%)
OPEN

635.00

HIGH

643.90

LOW

626.00

OPEN 635.85
PREVIOUS CLOSE 630.25
VOLUME 55759
52-Week high 1380.00
52-Week low 533.10
P/E 18.28
Mkt Cap.(Rs cr) 16,961
Buy Price 640.05
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00
OPEN 635.85
CLOSE 630.25
VOLUME 55759
52-Week high 1380.00
52-Week low 533.10
P/E 18.28
Mkt Cap.(Rs cr) 16,961
Buy Price 640.05
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00

Divis Laboratories Ltd. (DIVISLAB) - Chairman Speech

Company chairman speech

DIVI'S LABORATORIES LIMITED ANNUAL REPORT 2008-2009 CHAIRMAN'S REPORT Ladies and Gentlemen, Good Morning. I extend a hearty welcome to you all, to this 19th Annual General Meeting of the Company. The Directors Report and the Audited Accounts for the year 2008-09have already been circulated, and with your permission I take themas read. I am glad to report that the performance of your company in the year 2008- 09 has been satisfactory, despite the economic slowdownwhich started off in the advanced countries with a consequent effecton other countries as well. Operations for the year 2008-09 It is now my pleasure to present our company's financial results forthe year. Some of the highlights are: * Achieved a total income of Rs.1214 crores during the year asagainst Rs.1047 crores during the previous year, reflecting agrowth of 16%. * Profit before Tax of Rs.458 crores as against Rs. 385 croresduring the last year. * Tax provision of Rs.34 crores for the year as against Rs.31crores during the previous year. * Profit after Tax (PAT) for the year of Rs.424 crores as against Rs. 354 crores during the previous year. The year has seen very high fluctuations in foreign currencies. Due tothe substantial export business that it has, the company has hedgedsome of its exposure and also undertaken some foreign exchangederivative transactions. There was a net loss of Rs.31 crores duringthe year on account of forex fluctuation losses on these treasuryoperations including the Mark-to-market losses on the outstandingderivative contracts as against a net loss of Rs. 10 crores during last year. We have fully provided for all foreign currency translation losses as well as MTM losses on forex forward contracts, short or long termand have not exercised the option available in respect of exchange difference on long term monetary items under clause 46 of Accounting Standard -11 notified by the Ministry of Company Affairs under the Companies Accounting Standards (Amendment) Rules,2009. Taxation of profits of EOU/SEZ As you all know, the company has three manufacturing facilities, Unit-1 near Hyderabad, EOU and SEZ Units near Visakhapatnam. In therecent budget, the Government has extended the income-taxexemption for export profits from the EOU Units upto 31st March, 2011. Our Divis Pharma SEZ notified under the Special Economic Zone Act, 2005 is eligible for income-tax exemption under Section 10AA of the Income-tax Act, 1961 at 100% of export profits for thefirst five years of commercial operations, 50% for the succeeding fiveyears and thereafter for a further period of 5 years for an amount notexceeding 50% of its export profits subject to certain conditions prescribed. However, there is an anomaly in the drafting of Section 10AA(7) of the Income-tax Act and the wording and interpretation of the sectionis restricting the quantum of exemption and created a discriminationbetween companies having Units in SEZs as well as outside vis-a-vis companies having Units only or exclusively in SEZ. The industry hasrepresented the matter to the Government and several statementswere made in the press as well as in the parliament by theGovernment that it has been decided to remove this anomaly.Although the Union Budget for 2009-10 adopted by the Parliamenthas removed the anomaly by amendment to the Income-tax Act, but ithas been made only prospective that is effective 1st April, 2009 - thus denying the benefit of 100% exemption of export profits for theprevious financial years to companies like us. Operations of Quarter ending 30th June, 2009 While the various industry associations and bodies have againrepresented on the anomaly of SEZ taxation to the Government, wehad to provide for the shortfall of tax provision for the previous yearsin our accounts for the first quarter ended 30th June, 2009 in view ofthis amendment by Parliament. The impact of the ongoing economic slowdown and financial crisis inthe developed markets has forced our customers work on leanoperations and destocking of inventories across their supply chains. This has resulted in lower sales for your company during the current year. Internationally, the effect of slowdown on pharma businessduring the current quarter is also seen on several of our peers or competitors. Industry outlook The last year has seen unprecedented global economic slowdownwith its effect on almost all markets be it commodities, crude, financialor currency. This has resulted in serious turmoil across the globewith varying severity across industry segments. Although pharmaceutical and healthcare sector is considered adefensive sector - nevertheless appears to have been impacted,albeit lesser than other sectors. Traditionally, the big pharmas usedto focus on regulated markets in developed countries like US,Europe, Japan for increasing their business. The recent trend is thatthese big pharmas are looking at emerging markets like India, China. To achieve this, the big pharmas are either acquiring or getting intostrategic relationships with Indian companies for developing businessin emerging markets. As part of their efforts to conserve resources in the current economicsituation, many of our customers have been undertaking leaninventory management and destocking inventories across all theirsupply chains covering their plants, warehouses, distributors, stockists as well as suppliers. Primary demand still remains intact and the long term outlook for thecustom synthesis business is robust and expected to grow. The MNCs are continuing to sell or shut-down their manufacturingfacilities, which confirms their continuing strategy for outsourcing their API needs. In the immediate and near term, though there is aslowdown in our sales due to the customers tightening their workingcapital cycles, the long-term outlook looks positive. Our R&D and manufacturing teams have been constantly strivingtowards achieving continuous improvements, minimizing wastes, optimizing processes in order to stay competitive. We also lay agreat stress on sustainability of scarce resources and have beeninstalling large reverse osmosis plants, energy efficient equipmentsand best manufacturing practices. During the year, we have submitted 5 Drug Master Files taking thetotal number of DMFs filed to 37 and we have Certificate of Suitabilitywith European Directorate for 10 products. There are a number ofsmall molecules coming out of patent giving opportunity to generic API players. Ladies and Gentlemen, I take this opportunity to express my sincerethanks to all of you for reposing trust and confidence in theManagement of the company. I also appreciate and place on recordthe valuable contribution made by the employees of the company.Your directors also acknowledge the continued support extended byour customers, suppliers, banks and various Government Bodies andStatutory Authorities. With warm regards, Dr. Murali K. Divi Chairman Date: 17th August, 2009 Source: Website Dated : 25th September, 2009