Torrent Pharma overseas arms register losses in 2003-04

Organisational recast, business development expenses hurt

Three overseas subsidiaries of the Ahmedabad-based Torrent Pharmaceuticals (TPL) that were set up to tap the international generic market registered losses in 2003-04.

This is in spite of the fact that TPL reported a 49 per cent rise in sales from its international operations in the last fiscal year at Rs 66.83 crore compared with Rs 44.83 crore in the previous year.

The three wholly owned subsidiaries of Torrent are include ZAO Torrent Pharma, which looks after Russia and CIS countries, Torrent Do Brasil Ltda, reponsible for Brazil and Latin America, and Torrent Pharma GmbH, focusing on the European generics market. A fourth overseas subsidiary, Torrent Pharma Inc, USA, was incorporated recently and is yet to complete a year.

For the calendar year 2003, ZAO Torrent Pharma (ZAO TP) achieved sales of Rs 6.84 crore (RRU 44.2 million), down 11 per cent from sales of Rs 7.67 crore (RRU 49.7 million) in calendar year 2002. Its net loss for 2003 was Rs 50 lakh against a net profit of Rs 19 lakh for the previous year.

At a consolidated level, for the year 2003-04, the Russian operations of the company registered sales of Rs 15.22 crore against sales of Rs 14.43 crore for the previous year. The loss before tax for the year 2003-04 stood at Rs 6.53 crore against a profit of Rs 1.39 crore for the previous year.

ZAO TP essentially imports medicines from TPL and distributes it in Russia and CIS, sourcing its entire requirements from the parent company.

The loss of ZAO TP reflects the fall in sales mainly due to organisational restructuring and an increase in marketing expenses, the company's annual report said.

Torrent Pharma GmbH (TPG), Germany, which was incorporated in 2002-03, completed one full year of operations in the 2003-04 fiscal. During the year, TPG earned revenues of Rs 1.51 crore (2,71,000 euro) against revenues of Rs 95.04 lakh (1,70,000 euro) in the previous fiscal.

However, TPG posted a loss of Rs 50.76 lakh (90,793 euro) in the past fiscal, as compared with a profit of Rs 1.16 lakh (2059 euro) in the previous year. Torrent has so far invested 2.55 lakh euro as capital investment in TPG.

The loss was mainly on account of business development expenses, which were not fully absorbed by the contribution in the first full year, the annual report said.

Torrent Do Brasil Ltda, the wholly owned Brazilian subsidiary of TPL, incurred a net loss of Rs 4.19 crore in 2003-04. The Brazilian subsidiary commenced sales in the third quarter of 2002-03.

It posted a net loss of Rs 8.79 crore in the last two quarters of the previous year. In the 2003-04 fiscal, TBDL achieved sales of Rs 22.56 crore. TBDL is expected to see a turnaround in 2004-05.

On a consolidated basis, the Brazilian operations incurred a loss before tax of Rs 6.92 crore as compared to a loss before tax of Rs 14.43 crore in the previous year.

Torrent Pharamaceuticals Inc USA, which was incorporated in the past fiscal, is aimed at leveraging the growing and large North American generic market. The company has, as of March 31, 2004, invested $1 lakh US dollars as capital in the North American subsidiary.

Torrent Pharmaceutical Ltd officials could not be reached for comment, despite several attempts made by Business Standard.

Torrent Pharmaceuticals posted a 27 per cent increase in sales in 2003-04 at Rs 462.51 crore, compared with Rs 364.34 crore in the previous year.

Operating profits reached Rs 102.77 crore, up 20 per cent from Rs 85.99 crore, while net profit increased 20 per cent from Rs 51.77 crore in 2002-03 to Rs 64.17 crore in 2003-04.