The decline is, however, essentially due to a payment of Rs 3.27 crores made towards voluntary retirement schemes during the period ended December 31, 1998. Sales and income from operations rose 19 per cent to Rs 250 crores as against Rs 210.08 crores in the previous year. Profit before taxation and VRS payments was higher at Rs 18.63 crores, an increase of 19 per cent over the corresponding period of the previous year.

Net profits for the quarter ended December 31, 1998, increased by 59 per cent to touch Rs 4.21 crores as against Rs 2.65 crores in the corresponding period of the previous year. Sales for the quarter increased by 25 per cent to Rs 79.90 crores as against Rs 64.02 crores in the previous year. The company said that the improved performance during the quarter was on account of a 28 percent sales growth in the domestic formulations market and a 16 per cent growth in the international market.

During the nine month period, total expenditure rose to Rs 215.13 crores (Rs 181.54 crores) while financial costs increased to Rs 11.22 crores from Rs 8.46 crores in the previous year. Depreciation stood at Rs 5.12 crores, while provision for taxation was Rs 40 lakhs.

Ipca has also lined up several new formulations for the domestic and international markets. The Mumbai-based company has registered its drug master files with authorities of several developed countries. Bulk drugs and drug intermediates manufactured by Ipca are now used by several leading multinational companies all over the world, the release added.

INSIGHT
Discounting still low: The operating margins of the company in the third quarter improved from 11.5 percent to 12.14 percent. Primarily this was aided by the price revisions in three major drugs of the company from March 1998 namely Perinom, Eltocin, and Tenolol.In addition the tax rate has been traditionally at a low level because of exports sales being close to 50 percent of the total sales.

Nevertheless the stock market continues to give the stock a low discounting. In the recent rally Ipca Labs has been one of the few stocks that saw a price fall. Basically fear of equity overhang on rumours of divestment of stake by one of the promoters and low margins in anti-malarial segment (the biggest contributor to the company earnings) have resulted in single digit discounting for the stock.