Domestic sales rose 21 per cent to Rs 57.78 crore. These results were announced after the firm's annual general meeting at Vadodara on Friday.

In order to improve transparency, the entire business of Sun Pharma Exports, a partnership firm in which Sun Pharma Industries held a 80 per cent stake, was assigned to Sunkalp Laboratories, a subsidiary of Sun Pharma.

Consequently the Rs 2.71-crore profit earned by the subsidiary for the period May 12, 1998 to June 30 has not been considered in the results. On a comparable basis, if the entire business of Sun Pharma Exports had not been assigned to a subsidiary, a profit after tax of Rs 13.99 crore and an EPS of Rs 36.79 (annualised) would have been achieved. Operating profit for the quarter was 32 per cent higher at Rs 13.86 crore. SunPharma managing director Dilip Shanghvi said that 1998 had begun on a good note and added that the company's performance was on track. Total exports at Rs 12.05 crore were up by 87 per cent as compared with Rs 6.46 crore in the previous year.

Depreciation and provision for taxation stood at Rs 1.70 crore and Rs 34 lakhs respectively. Provision for tax has been made after considering exemption/benefits available under the Income Tax act. Key among the new products launched this quarter were Zosert (sertaline), one of the fastest growing anti-depressants, Repace (losaratan sodium) an angiotensin 2 receptor blocker, and Lacivas (lacidipine) a calcium channel blocker with a vastly improved side effect profile.

INSIGHT

The first-quarter results cannot be compared with the corresponding period of 1997-98 following Sun's merger with Tamil Nadu Dadha Pharmaceuticals. Being a niche player, with a portfolio of cardiovascular, psychotic, anti-infective and gastro-intestinal drugs, Sun Pharma's operating andnet margins at 19 per cent and 16.4 per cent are higher than the industry average.

With a volume growth of 20-25 per cent, the company has posted an 31 per cent increase in its bottomline despite earnings being lower from the conversion from 80 per cent subsidiary to a wholly-owned one. On an annualised basis, this would not have a significant effect as Sun would continue to get dividend income as in the past. The lower net interest income is because of the higher interest outgo of Rs 2.17 crore paid to Tamil Nadu Dadha Pharmaceuticals after the merger.