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New Delhi/Mumbai: India’s largest drug maker by revenue Sun Pharmaceuticals Industries Ltd on Thursday reported a 15.4% increase in its consolidated net profit to 1,572.46 crore in the September quarter, compared with 1,362.3 crore in the year-ago period on increased sales in the domestic as well as export markets.

The net sales stood at 4,750.53 crore for the quarter, up 13.32% from a year ago. It had posted net sales of 4,192.05 crore in the same period last fiscal.

The company saw growth in domestic sales, exports and markets outside the US. Branded generic sales in India increased by 21% at 1,152 crore this quarter; US finished-dosage sales increased 15% at $481 million; and international formulation sales outside the US was reported at $89 million, an increase of 12% over the year-ago period.

“The company has a forte in the domestic market where it grows each year in double digits. This quarter also, its highest growth was in the domestic market, but they have grown in the US and other markets as well," said Sarabjit Kour Nangra, vice-president, research- pharma, Angel Broking Ltd.

Consolidated net sales from operations of the company for the first half of the current fiscal stood at 8,677 crore, an increase of 13% from last year.

Net profit for the first half this fiscal year was 2,963 crore, compared with 862 crore last year.

Despite positive numbers, the firm could not meet market expectations. A Bloomberg poll of analysts had estimated net profit at 1,691.9 crore on net sales of 4,882.5 crore.

According to Nangra, Street expectation was too high and the current numbers cannot be seen as disappointing.

“The operating margins of the consolidated company were very good at 45.6%. However, I don’t think it would be easy to keep such a margin sustainable for such a large company," she said.

Sun Pharma did well in the US market on the back of the company’s subsidiary Taro Pharmaceuticals Ltd whose profit increased 49% at $143 million for the second quarter.

“A significant rise in the company’s numbers is because of Taro Pharma. If you remove that, I don’t think the company did that well. While operating margins of the combined entity at 45% were good, if you remove Taro Pharma, the operating margin would be down to 35%," said Surajit Pal, an analyst with brokerage Prabhudas Lilladher.

Sun Pharma has been known for acquiring distressed assets and turning them around, Taro being an example. The latest acquisition by the company is of Ranbaxy Laboratories Ltd, announced this year.

Dilip Shanghvi, managing director of the company, said in an earnings call on Thursday, “We are in the process of obtaining various regulatory approvals for the merger. The process is ongoing. We have received clearances from stock exchanges, shareholders and competition authorities in all markets apart from India and US. The merger will also require approval from Indian courts."

He said the company is targeting closure of transaction by December 2014 but there are chances of a minor delay, based on pending approvals.

The company said its board has approved merging its foreign arm, Sun Pharma Global, with itself, subject to approval of shareholders, regulators and the Gujarat high court.

Sun Pharma will focus on strengthening its existing businesses, developing a differentiated and specialty products basket and planning for the Ranbaxy integration, Shangvi said.

“We will continue to invest in Ranbaxy integration which will get offset by potential synergy related benefits," he said.

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