Mumbai, June 18 : Chennai-based Shasun Chemicals and Drugs (SCDL) has registered an outstanding performance for the year ended March 31, 2000, due to a reduction in raw material cost for the second consecutive year coupled with reduced interest cost. Although the turnover rose by a modest six per cent to Rs 175.75 crore, net profit shot up by over 173 per cent to Rs 20.46 crore during the same period. Operating margins improved to 22.05 per cent in the current year 1999-2000 from 13.97 per cent in the previous year.SCDL has a bulk drug capacity to produce Ibuprofen and Ranitidine with a total installed capacity of 3,300 tonne. The company plans to enhance production capacity for Ranitidine to 45 tonne per month from 22 tonne at a cost of Rs 8 crore. The complete benefit of the expansion will accrue to the company during the current fiscal ending 2001.
Due to its conscious strategy to focus on the export market, the company survived a 17 per cent downward revision in the prices of Ibuprofen. The Drug Price Control Order had revised the prices of Ibuprofen to Rs 365 per kg from Rs 440 per kg earlier, while the realisation in the export market was much higher at around $13.5 kg (Rs 607 per kg).
The Union budget's proposal to tax the export earnings will, however, have an adverse impact as exports constitute almost 70 per cent of the company's turnover. The company also faces a major threat from Chinese competitors who have a much lower cost of production.
However, the new patent regime which will come into effect from 2005, is unlikely to affect the company's fortunes as its two major products - Ibuprofen and Ranitidine - are off-patent.SCDL is also in the process of privately placing 10 lakh equity shares of Rs 10 each at a price of Rs 230 per share for which shareholders approval has been sought. A major part of the Rs 23 crore mop-up will be utilised to increase production capacity for Ibuprofen capacity 3,600 tonne from 3,000 tonne per annum at present.
The company has also gone for forward integration by obtaining a licence from US-based Eastman Chemical Ltd to manufacture a pharma excipient, which is used as a coating on tablets to reduce irritation in the stomach. The company, which is investing Rs 50 lakh in plant and machinery for the manufacturing unit, will produce 200 tonne of the pharma excipient. Company officials say that the forward integration will fetch a revenue of around Rs 15 crore.
The move, analysts say, is a positive step towards the company's foray into formulations which is expected in the current fiscal. The scrip price has moved up from Rs 111 to Rs 148 per share in anticipation of better performance during the months ahead.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.