Mumbai: Significant savings in raw material cost and a foreign exchange gain helped Cipla Ltd, the country’s second largest drug maker by revenue, post a 42.7% growth in net profit at Rs179.45 crore during its fourth quarter compared with the year-ago period.
Unlike its main Indian rivals, Cipla did not face much margin pressure from the rupee’s gain against the dollar. Most of its exports were to countries where the currency is euro, which too saw similar appreciation against the US currency.
The company’s sales at Rs1,102.29 crore grew by 18.6% compared with the year-ago quarter’s Rs929.06 crore.
Cipla, which follows an April to March accounting year, has also for the first time, crossed the $1 billion (Rs4,000 crore) mark in annual turnover at the end of the fourth quarter, with total sales of Rs4,097 crore.
The company’s joint managing director, Amar Lulla, said: “The material cost (in proportion to income from operations) was lower as compared to the corresponding quarter of previous year mainly due to changes in product mix. The operational efficiency we achieved during the year has also led to an attractive growth in profits in the last quarter.”
Cipla’s raw material cost and operational expenditure during the last quarter of the fiscal year grew by only 14.6% and 10%, respectively, compared with its 18% growth in sales. “We have achieved 16% growth, which was well in line with the estimates in the annual sales,” Lulla said. Cipla’s revenue from domestic business and exports grew by more than 13% and 23%, respectively, for the quarter compared with a year ago.
“The higher cost efficiency achieved in raw material consumption and also the launches of certain important products in last quarter had really contributed to the increased profit,” said an analyst with a foreign equity broking firm who did not want to be named.
“The euro-dominated export markets have also helped Cipla to maintain a higher growth in foreign business earnings despite a rupee appreciation against the dollar,” he said.
Cipla, which faced a legal challenge from multinational F Hoffman La Roche Ltd for launching a generic version of lung cancer drug erlotinib, said the product contributed about Rs40 lakh to the company’s revenue in the quarter.
Lulla said it will launch a few more products in the growing cancer and HIV/AIDS market in India this year.
According to him, Cipla’s employee cost increased by about Rs30 crore mainly on account of annual increments and workforce additions. But, tax for the quarter was lower due to tax incentives available at the tax free zone Baddi and a few other location where it operates export oriented units. Other income rose to Rs41 crore, including a foreign exchange gain of Rs25 crore.
Shares of Cipla fell 0.82% to Rs224.30 on the Bombay Stock Exchange on Friday.