Home / Companies / Q3 Fy19 Results /  Sun Pharma Q3 net profit jumps fourfold

New Delhi: Sun Pharmaceutical Industries Ltd’s founder and managing director Dilip Shanghvi on Tuesday assured investors that they have not been “disadvantaged", following serious corporate governance issues that emerged last November.

Shanghvi said the company has responded to the Securities and Exchange Board of India (Sebi) that is examining a complaint by a whistle-blower, who had approached the capital markets regulator with a 150-page letter alleging various irregularities by the company, its promoters and others.

The letter highlighted Sun Pharma’s dealing with subsidiary Aditya Medisales Ltd (AML), a pharmaceutical distribution company classified as a promoter shareholder of Sun Pharma with a stake of 1.6% as of end-December. Concerns have been raised by investors as to whether AML has made any gains in the past at the cost of Sun Pharma.

Shanghvi allays the concerns and said “I would like to take this opportunity to clarify certain queries that have been raised by some investors. The queries pertain to whether AML has benefitted in the past at the cost of Sun Pharma minority shareholders.

AML’s financials are available in the public domain and it can be seen that it earns Ebitda margins of only about 1.4% from Sun Pharma for distributing its products in India," he said.

“I would like to reassure investors that at no point of time Sun Pharma shareholders had been disadvantaged in the transaction with AML," he said, reiterating that the company has taken corrective steps. “The issues bothering investors are behind us and we can focus on growth of the business," he said in a post-earnings investors call on Tuesday.

The drug maker’s profit in the December quarter rose nearly four-fold to 1,242 crore from 321.5 crore in the year-ago period.

“Our 3Q performance was in line with our expectation," Shanghvi said.

Revenue from operations increased 17% year-on-year to 7,933.25 crore from 6,782.42 crore. Sales for the quarter rose 1.16% to 7,656.71 crore from 6,598.21 crore in the same period last year. Ebitda for the quarter came in at 2,151 crore. The Ebitda margin at 28% exceeded street expectations of a 21.8% margin. Ebitda is earnings before interest, taxes, depreciation and amortization.

Given the volatile times in the US, Shanghvi said Sun Pharma will focus on investing and getting the best out of the products they have launched already there.

“Our focus on execution is reflected in the 3Q performance. We remain committed towards executing our global specialty strategy, strengthening our core operations and enhancing our overall efficiencies. The Ilumya launch in the US has been well received by doctors. We recently commercialised Xelpros in the US and are preparing to launch Cequa in the coming months," Shanghvi said. The company will also focus and is likely to invest more on research and development, and clinical trials, he added.

Sales in the US, which accounted for more than 34% of total sales, rose 10% to $362 million during the December quarter. Its sales at home grew 7% to 2,235 crore the company said.

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