Contract research and manufacturing services (CRAMS) major Dishman Pharmaceuticals & Chemicals Ltd (DPCL) has turned around its ailing Swiss subsidiary Carbogen Amcis, which has grown by 65 per cent to touch revenues of Rs 133 crore during the first quarter of the current financial year.
Riding on the back of the turn-around, DPCL's consolidated profit for the quarter grew two-fold to Rs 38.70 crore.
Janmejay R Vyas, chairman and managing director of Dishman Pharma, said,"We have completed restructuring our Swiss subsidiary Carbogen Amcis. Basically, we have been working on it for the last one and a half years now. At present we will focus on consolidating the business and no expansion or diversification at Carbogen Amcis is planned as of now." He added that Dishman expects to register a consolidated net profit of Rs 100 crore for the financial year 2012-13, of this, Carbogen Amcis would contribute around Rs 39 crore.
Currently, Carobogen contributes over 40 per cent of Dishman's overall revenues, Vyas said. Carbogen's EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin improved from -3.7 per cent to 16 per cent, Equity Bulls said in a report. This has led to sharp improvement in EBIDTA margin of CRAMS segment.
Thanks to a successful restructuring, DPCL's personnel expenses during the first quarter of the current financial year declined by 2.5 per cent on a year-on-year basis to 27.2 per cent from 29.7 per cent in a year-before period. Dishman had started retrenching manpower at the Swiss subsidiary from the beginning of the fiscal 2010-11, starting with cutting down 20 per cent of its employee strength and getting a new chief executive officer from March 2010. Going ahead with the restructuring, however, the erstwhile CEO was fired for poor performance in February 2011, and Vyas himself took charge of the subsidiary.
From then on, the active pharmaceutical ingredient (API) maker focussed development projects at its Aarau site, and shifted pilot production for early stage compounds to its facility in Huzenschwil, while Large volume production for both standard APIs and highly active agents remained at Carbogen's facility at Bubendorf in Northern Switzerland. The firm which employed 350 people then (February 2011),once again, cut around 60 jobs. However, it started hiring additional staff at the Huzenschwil plant. The decision to retrench 60 people saved close to $8-10 million (Rs 35-45 crore) per annum.
In July 2011, Carbogen appointed a new chief executive officer, Marck C Griffiths, who has been associated with the company as director, operations for the last ten years.
Moving ahead on the path of recovery, Carbogen gradually started making strategic changes in its business geographies, increasing focus on Japan as against the European countries. Around May 2012, the Swiss API maker retrenched around 80 scientists, that brought down the company's wage bill significantly.
Sanjay Majmudar, director, DPCL confirmed that the ongoing restructuring process at Carbogen is complete, and no further retrenchments are planned. The firm is on its way to profitability, and that the current head-count is around 300 people, he informed.
It may be mentioned here that earlier this year, Dishman Pharma acquired a French contract development and manufacturing company, Creapharm Parenterals through Carbogen Amcis. Commenting on the impact of the acquisition on the Swiss subsidiary's bottomline, Vyas said, "Creapharm is hardly a $2million company. It is more of a strategic acquisition, and not for revenue offtake. The acquisition would help to offer end-to-end solution by way of formulation facilities."