Interest Burden Erodes Sun Pharmaceuticals' Bottomline

Sun Pharmaceutical Industries, based in Mumbai, manufactures drugs for the central nervous system (CNS), cardiac care and anti-diabetes. It also produces drugs recommended by psychiatrists.

The company, into its 16th year of its incorporation, is headed by chairman Shantilal N Shanghvi.

The firm's sales turnover increased by over 47 per cent in 1997-98. In the previous year, too, it recorded a similar growth in turnover.

But operating profit growth dropped by nearly 24 per cent in 1997-98, against a near 35 per cent growth the previous year.

Sun Pharma registered an impressive growth in exports. During 1997-98, export earnings rose by more than 310 per cent against a 52.5 per cent rise the year before.

 

High value prescription brands and speciality bulk drugs were popular exports across 26 countries. China and Sri Lanka continued to be high growth brand markets.

Gains also continued to be made in Russia, where Sun Pharma has a commanding presence in drugs prescribed by psychiatrists and neurologists . Bulk drugs exports to Europe and Latin America accounted around 42 per cent of total exports.

During 1997-98, due to a respective rise of 107 per cent and 54 per cent in interest and depreciation, net profit growth dipped to 14.4 per cent from 26 per cent the previous year.

During the first quarter of the current year, domestic sales turnover increased by 20.6 per cent to Rs 57.8 crore from Rs 47.9 crore in the corresponding period the previous year.

Export sales moved up to Rs 12.05 crore from Rs 6.46 crore - an increase of 86.53 per cent. During the same period, net profit rose to Rs 11.8 crore from Rs 9 crore.

Sun Pharma was formed as a partnership firm in 1982 to manufacture formulations at Vapi in Gujarat. It became a limited company in March 1993 and made a public issue of Rs 55.5 crore at a premium of Rs 140 per share in October 1994.

It used the raised fund for expansion and modernisation of its plants at Panoli, Silvasa and Vapi. Its R&D division, Sun Pharma Advanced Research Centre, is situated at Vadodara in Gujarat.

In 1996-97, Sun Pharma acquired a bulk drug plant at Ahmednagar from Knoll Pharma and last year, Tamil Nadu Dadha Pharmaceuticals was merged with the company. Sun also has controlling stake in M J Pharma and Gujarat Lyka. It has acquired an American pharma company, Caraco, in Detroit.

At present, it is one of the leading players in the pharma industry, manufacturing a wide range of formulations and bulk drugs. Sun Pharma's major brands are Montrate, Alzolam, Famocid, Angizem, Betatrop, Sparlox and Syndopa.

Major bulk drugs manufactured by the company are Alendronate sodium, Sodium lactate, Danazol, Carvedilol and Meloxicam.

Sun has four specialised marketing divisions. They are Synergy, Aztec, Sun and Incare, which deal with CNS &psychiatry, cardiac care, gastro-enterological and incentive care unit products respectively.