Wockhardt posts a smart turnaround

The smile usually doesn’t leave Habil Khorakiwala’s face. But the cheer in that smile had gone missing in last four years, as his pharma company, Wockhardt, plunged into one crisis after another. on Monday, the cheer came back, with the firm posting a spectacular 95 per cent growth in net profit in the June quarter.

Wockhardt is also set to exit the corporate debt restructuring programme it entered in 2009 when its debt touched Rs 3,800 crore. But following a series of sale of non-core assets, the pharma major’s debt-equity ratio has come down from a high of 5:1 to below 1.

That is a distant memory from April 2008 when Wockhardt reported its first ever loss, due to a mark-to-market loss of Rs 581 crore. The market has been quick to recognise the smart turnaround: the share price of the company had nosedived to Rs 96 during the end of 2008 from Rs 419 on January 1, 2008. The stock price went down further to Rs 68 on March 12, 2009. On Monday, the stock price ended at Rs 1,085.

Khorakiwala said on Monday debt worth about Rs 1,300 crore has been structured through CDR already. However, he refused to disclose the exact amount of the remaining debt. The fund, which Wockhardt had received after the nutrition business sale to Danone last week, will be used to repay the debt.

During the first quarter, Wockhardt’s consolidated net profit went up to Rs 378 core from Rs 194 crore in the similar period for last year. Net sales also grew 35 per cent to Rs 1,426 crore from Rs 1,053 crore. The company’s US business recorded a growth of 78 per cent during the quarter.

Wockhardt has also repaid almost all its pending foreign currency convertible bonds (FCCB). About Rs 200 crore, the last tranche of FCCB due, will be paid before August 31 as directed by the Bombay High Court.

Recently, French food multinational Danone completed its acquisition of Wockhardt’s nutrition business for Rs 1,280 crore. Wockhardt was awaiting for a clearance from the Bombay High Court after it got engaged in a litigation with bondholders, after defaulting on the re-payment of its $110 million FCCB in 2009.

Wockhardt had agreed to pay the bondholders after the Bombay High Court directed debt-ridden company to clear its payments by August 31.