Drug maker Wockhardt Ltd on Thursday reported a net loss of Rs189 crore for the June quarter, largely because of mark-to-market losses and other costs, including interest charges. In the year-ago period, the company had a net profit of Rs106 crore. The net loss was posted on a 5% increase in sales to Rs954 crore, from Rs910 crore a year ago.
Wockhardt chairman Habil F. Khorakiwala said in a statement to stock exchanges that the company had mark-to market losses of Rs255.30 crore for the quarter, based on an independent evaluator’s report.
Mark-to-market is an accounting practice of assigning a value to an asset, based on current market price and not at the price at which it was acquired. The evaluation is in line with guidelines on accounting for derivatives issued by the Institute of Chartered Accountants of India in March 2008.
Wockhardt also incurred expenses of Rs51.5 crore on account of interest, financial charges and currency fluctuation.
The company has already divested three units, including the German business that it bought from Esparma GmbH in 2004, as well as its animal health business and nutritional business, in the last five months to pay part of its liabilities.
Wockhardt may divest some more assets including its biotechnology business and a few of its brands. It is in advanced talks with potential buyers, said a merchant banker who has advised the company in the recent past.
The firm, India’s sixth largest drug maker by sales, has liabilities of at least Rs1,414 crore due by December. This includes redemption of foreign currency convertible bonds worth $110 million (Rs533.5 crore).
Wockhardt has entered a corporate debt restructuring programme with its lenders. The company said it was evaluating other options for restructuring its debt, and that the foreign currency bonds, including the premium payable on them, are part of the restructuring.
Wockhardt is also changing its accounting period from the existing January through December period to an April through March period, beginning in the current fiscal year. Consequently, the fiscal year ending 31 December 2009 will now be extended by three months to 31 March 2010.
It also changed its auditors in May by replacing SR Batliboi and Co. with BDO Haribhakti. The audit firm was due for review and Khorakiwala said the change was to ensure greater transparency.
Wockhardt had to delay the announcement of its results as SR Batliboi and Co. asked for more details on the firm’s currency exchange and derivative losses apart from details on certain international businesses.
The company’s shares rose 1.82% on Thursday to close at Rs148.30 on the Bombay Stock Exchange. The results were declared after trading hours. The bellwether Sensex closed 1.41% up at 15,387.96 points.