Granules Q3 net down 27%

Dent in profitability attributed to increased overhead costs on account of capacity expansion

Hyderabad, 24 January: Hyderabad-based Granules India Limited has reported a 27.3 per cent drop in net profit at Rs 5.80 crore for the quarter ended December 2012 as compared with Rs 7.98 crore in the corresponding quarter last year.

The dent in profitability has been attributed to increased overhead costs on account of capacity expansion that largely left unutilised in the last couple of quarters and lower revenue growth.

The total income from operations grew by 5.1 per cent to Rs 195.22 crore in the quarter under review from Rs 185.72 crore in the year ago period.

"We were supposed to double our capacity in granulation but some teething problems had delayed the process by two quarters as we deployed   new technologies. This and similar constraints led to lower revenue growth," Harsha Chigurupati, executive director of Granules India said.

The company expects to achieve the capacity targets and subsequent increase in the share of high margin formulations business from the beginning of the next fiscal. The company plans to increase the formulations to 45-50 per cent of the total business in the next couple of years from the present 30 per cent level, according to Chigurupati.

 Active Pharmaceutical Ingredients (APIs) or bulk drugs account for 40 per cent  pharmaceutical formulation ingredients (PFIs) contributed around 25 per cent to the revenues in the December quarter. According to  V V S Murthy, chief financial officer, the company expects to close the current financial year with a 25 per cent growth in revenues while net profit expected to be flat.
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