At operating level margins are under pressure as the OPM fell by over 350 bps YoY to 32.2% and accordingly there was 7% decline in operating profit to Rs 202.80 crore. Even after the sharp boost in other income (44% YoY) coupled with marginal decline in depreciation there was 3% growth in PBT before EO to Rs 272.02 crore.

However, the costs rationalization initiatives (Rs 92.97 crore EO loss against Rs 300.49 crore) pertain to manufacturing site were lesser during the quarter. As a result there was profit of Rs 179.05 crore at PBT level against loss of Rs 35.97 crore in the corresponding previous quarter. After accounting Rs 56.16 crore as provision for taxation (against tax credit of Rs 36.43 crore) net profit was at Rs 122.89 crore (against mere 0.46 crore).

Standalone Quarterly Performance:

Net sales grew by subdued 3% YoY to Rs 622.78 crore for the quarter ended March 2012. Also, sales from the core pharmaceuticals business witnessed tepid 7% growth during the quarter. At operating level margins are under pressure as OPM fell by over 350 bps YoY to 32.2% on the back of rise in other expenses (130 bps YoY) coupled with increase in staff cost (70 bps YoY) despite the fall in consumption cost (170 bps YoY) as percentage to sales and net of stock adjustments. Accordingly, there was 7% decline in operating profit to Rs 202.80 crore. But the sharp growth in other income by 44% YoY facilitated the 3% growth in PBIDT to Rs 276.14 crore.

With 7% decline in depreciation to Rs 4.12 crore, PBT before EO grew by 3% to Rs 272.02 crore. After adjusting EO loss Rs 92.97 crore (pertains to rationalization of manufacturing site) as against Rs 300.49 crore, Profit before tax was at Rs 179.05 crore (as against loss Rs 35.97 crore). However, after accounting the provision for taxation Rs 56.16 crore compared to tax credit Rs 36.43 crore, net profit was at Rs 122.89 crore as against Rs 0.46 crore in the corresponding previous quarter.

Standalone Yearly Performance:

Net sales grew by moderate 11% YoY to Rs 2338.03 crore for the year ended March 2012. However, operating margins were at 32.9% (fell by 300 bps YoY) as against 35.9% year ago and accordingly growth in operating profit limited to mere 2% to Rs 782.38 crore. But the sharp 46% rise in interest income to Rs 141.62 crore and after accounting marginal depreciation (16% YoY) Rs 20.41 crore there was 6% growth in PBT before EO to Rs 921.59 crore. After adjusting to the EO loss Rs 322.54 crore (against nil) PBT fell by 31% YoY to Rs 599.05 crore. Thanks to the 46% fall in provision for taxation to Rs 168.45 crore the fall in net profit restricted to 26% YoY to Rs 430.60 crore.

Other Information:

• The scrip is hovering at Rs 2090.70 at BSE, India on 08^th May 2012.