Smithkline Pharma

Otherwise, its leading brands - Iodex, Fefol, Fefol Z, Zevit (iron, zinc and vitamins), Zentel (anti-helminthic)- are facing increasing competition in their respective segments. In fact, the dealers discount accounted for an hefty 22 per cent of the sales figure. Also, the comparatively lower growth in the operating profit at 19.8 per cent, indicates the squeeze in margins.

Despite this, the company managed better growth in the bottomline. Net profit increased by 44 per cent to Rs 13.08 crore (Rs 9.02 crore). This is despite the reduction in the contribution of other income to the profit before tax (PBT) from 22 per cent to 10 per cent, which is a positive factor.

The improvement in bottomline is primarily on account of lower tax liability. The tax burden came down by 11 per cent to Rs 6.39 crore (Rs 7.20 crore), despite 20 per cent growth in PBT to Rs 19.47 crore (Rs 16.22 crore). Otherwise, the advantages offered by the reduction in the interest charges by 29 per cent to Rs 0.26 crore (Rs 0.37 crore), are negated to a large extent by the hike in depreciation charges by 41.8 per cent.

With increasing competition, the growth in future has to be achieved through launch of new products. However, its parent, whose forte is in the vaccines segment, has set up a 100 per cent subsidiary in India to promote its vaccine business. Active interest in this subsidiary might affect the interests of the shareholders of Smithkline Beecham Pharma.