Granules Q3 net down 27%

Hyderabad-based Granules India Limited reported a 27.3 per cent drop in net profit to 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 was attributed to increased overhead costs on account of capacity expansion that was largely left unutilised in the last couple of quarters and lower revenue growth.

Total income from operations grew 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 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 financial year. It 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 accounting for 40 per cent of the pharmaceutical formulation ingredients (PFIs) contributed around 25 per cent to the revenues in the December quarter. VVS Murthy, chief financial officer said the company expected to close the current financial year with a 25 per cent growth in revenues while net profit could remain flat.