Dr Reddy's net dip by 86 percent due to Venezuela write-off

Leading drugmaker, Dr Reddy's Laboratories Ltd said on Thursday that its net profit fell 86 percent during the fourth quarter ending March, mainly due to write-off in Venezuela on account of economic crisis.

Net profit was Rs.74.6 crore for the quarter against Rs.518.9 crore during the corresponding period last fiscal. Total income also declined by three percent to Rs.3,756.2 crore against Rs.3,870.4 crore during the same period in 2014-15.

The Hyderabad-based firm took a hit of Rs.430.9 crore during the quarter as it had to translate the assets and liabilities of its Venezuelan subsidiary in line with current currency value. The impact for the fiscal 2015-16 was Rs.508.5 crore.

The Latin American country, one of the largest markets for Dr Reddy's, did not allow it to transfer any money outside the country beyond $4 million it already received during the year.

"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," said CEO and co-chairman G.V. Prasad.

"We will continue to actively engage with the Venezuelan government to provide affordable medicine to fulfil the need of people of the country, subject to repatriation of funds," he said.

Sales from generic drugs were almost flat during the year at Rs.3,077.4 crore. They grew by 12 percent in North America but declined by 18 percent in Europe and 31 percent in emerging markets.

Sales in India grew by 11 percent to be at Rs.526.7 crore during the year.

Sales of active pharmaceutical ingredient and services business, fell by 22 percent to Rs.577 crore.

The company, during the quarter under review, spent Rs.488 crore on research and development.

"Our Bio-similars business is gaining traction, as we have started to receive approvals and build partnerships for our products in the emerging markets.A Our topmost priority continues to be the strengthening of our quality management processes across the organisation," added Prasad.

--IANS

ms/vd