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Ranbaxy has reported a loss of Rs 1,029.73 crore for the quarter ended December 2014, its biggest quarterly loss. For the year-ago period, the company’s loss stood at Rs 159 crore.
During the December 2014 quarter, forex losses of Rs 130 crore and an eightfold rise (year-on-year) in the allocation towards minimum alternate tax of Rs 822 crore hit the company’s finances. Net sales fell 9.5 per cent to Rs 2,618.85 crore from Rs 2,893.99 crore in the year-ago period.
For the December 2013 quarter, Ranbaxy had recorded a forex gain of about Rs 10 crore.
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An operating margin of nine per cent for the quarter ended December 2014 disappointed the Street. Sales in the Indian market, including in the over-the-counter segment, saw growth of two per cent at Rs 590 crore, which analysts said was below expectations. In a statement, the company said India saw growth in the company’s primary segments within the branded business.
Chief Executive Officer and Managing Director Arun Sawnhey said, “During the quarter, Ranbaxy recorded good growth in India, Russia, Asia-Pacific and Latin America. However, overall sales were hit by global currency depreciation in some markets.”
Following the results, the company stock closed 1.01 per cent lower at Rs 699.75 on BSE.
Ranbaxy has been facing scrutiny by the US Food and Drug Administration, the regulator of the biggest drug market globally. The company’s plants in India are barred from selling products in the US. On Tuesday, Ranbaxy lost a key exclusivity period of the Nexium generic in the US market.
“Now, it is an exclusivity-driven business for the company. Last quarter, Diovan generic exclusivity had brought the company back in profits for that reason. Higher finance costs, with forex losses of about Rs 130 crore, have been the main reason for such a wide loss. The two per cent sales growth in India, too, was below expectations,” said Sarabjit Kaur Nangra of Angel Broking.
Sales in the US market fell to Rs 821.4 crore in the December quarter. The fall in demand of the Diovan generic led to a decline in sales in the American market, Nangra said.
Ranbaxy has been going through a rough patch for some time. Last year, the company had agreed to settle litigation related to its participation in Texas Medicaid, the US federal-state health care programme focused on people with low incomes. The settlement deal was worth about $40 million.
In May 2013, the company had paid a penalty of $500 million to the US Department of Justice, after pleading guilty to felony charges related to drug safety and misrepresenting data to secure approvals. The penalty comprised a $150-million criminal charge and $350 million in forfeiture and payments for civil claims.
