Dr Reddy's Q4 net down 85% at Rs 75 cr

Provisioning to write down receivables from Venezuela, higher tax expenses and decrease in revenues impacted the company's profits

Indian pharma major Dr Reddy's Laboratories Limited has reported an 85.63 per cent fall in consolidated net profit at Rs 74.6 crore for the quarter ended March, 2016 on the back of provisioning to write down the receivables from Venezuela and the increased tax expenses among other factors. The company's net profit in the corresponding quarter last year stood at Rs 518.8 crore.

The revenues from sales and services for the quarter decreased by 2.95 per cent at Rs 3,756.2 crore as compared with Rs 3,870.8 crore in the year ago period.

Decline in global generics revenues from the emerging markets and Europe as well a fall in the pharmaceutical services and active ingredients(PSAI) revenues from across the geographies have impacted the revenue growth of the company during this period.

Dr Reddy's management has shown the outstanding receivables of Rs 264.6 crore from Venezuela as a finance expenditure. It may be recalled that the Venezuelan Government had blocked the repatriation of dollar revenues from that country. Similarly, the company had to provide for higher tax expenses at Rs 173.9 crore in the quarter under review as compared to Rs 74.2 crore in the corresponding previous quarter.

"It's been a challenging quarter for Dr Reddy's. While there has been a marginal decline in revenues, there has been a greater impact on profitability. This is mainly due to the provision, made as a matter of abundant precaution, to write down our outstanding receivables from Venezuela. We will continue to actively engage with the Venezuelan Government to provide affordable medicine to fulfill the need of people of the country, subject to repatriation of funds," G V Prasad, co-chairman and chief executive officer of Dr Reddy's said.

According to Prasad, the bio-similar business was gaining traction as the company started receiving approvals and build partnerships with its products in the emerging markets. "Our topmost priority continues to be the strengthening of our quality management processes across the organisation,"he added.

For the full year ended March, 2016 Dr Reddy's consolidated net profit declined 9.76 per cent to Rs 2,001.3 crore from Rs 2,217.9 crore in the previous year. However, revenues grew by 4.4 per cent at Rs 15,470.8 crore as compared with Rs 14,818.9 crore in the previous year.

Gross profit margin at 59.6 per cent improved by 200 basis points over that of previous year while the gross profit margin for global generics and PSAI business segments stood at 65.9 per cent and 22 per cent respectively, according to the company.

Revenues from global generics segment for the year 2015-16 stood at Rs 12801 crore with an year on year growth of 7 per cent, primarily driven by North America, Europe and India, the company said.