The Hindu Business Line : Nicholas Piramal Q2 net profit flat at Rs 54.9 cr — Domestic sales drop on Phensedyl controversy

NICHOLAS Piramal India Ltd (NPIL) has posted net profit at Rs 54.9 crore for the second quarter ended September 30, 2005, as compared to Rs 54.3 crore for the same quarter last fiscal.

Total income (net of excise) is Rs 366 crore for the period under review, as compared to Rs 360.9 crore in the year-ago period.

During the second quarter, domestic formulations witnessed significant portfolio disturbance due to the Valdecoxib withdrawal, spin-off of the Rs 18-crore Carex division and the controversy over the cough syrup Phensedyl.

As a result, NPIL registered a 5.6 per cent drop in the sales of domestic formulations, a note from the company said. Sales of Phensedyl, a leading brand of the company, were adversely affected in Q2. As Phensedyl contains codeine derived from a narcotics origin, the Narcotics Control Bureau (NCB) initiated an investigation into the sale of the product. NPIL contested the action of NCB in the Courts and was successful, but only after a couple of months in establishing that Phensedyl is not a narcotic drug under the Narcotic Drugs and Psychotropic Substances (NDPS) Act. All persons arrested were released by a Court order, which accepted the company's contentions.

NPIL has since then initiated confidence-building initiatives among the trade channels, and brand-rebuilding measures. The company expects to bring the brand to normalcy over the coming quarters.

Commenting on the results, Mr Ajay Piramal, Chairman, said: "The results are difficult, particularly those for domestic formulations. We are committed to get back on our growth goals. On the custom manufacturing business, we believe we are quite close to gain further traction, and the expectations shared today are part of our overall plans in this space."

Meanwhile, the company has posted a net profit of Rs 109 crore for the half-year ended September 30, 2005, as compared to Rs 103 crore for the six-month period ended September 30, 2004.

Total income (net of excise) is Rs 748.9 crore for the half-year ended September 30, 2005, as compared to Rs 715.05 crore in the first half of the previous fiscal, NPIL told the BSE.The company pointed out that its results for the quarter and the half-year ended September 30, 2005 are not strictly comparable with the figures of the corresponding period of the previous year, since the current quarter's and half-year's figures include operations of the global inhalation anaesthetics business of Rhodia pursuant to the acquisition by NPIL in January 2005.

Also, it did not include operations of the diagnostics business from Roche pursuant to a settlement for discontinuance reached with the company, effective from January 1, 2005.

NPIL said that it expects to sign five new, long-term custom manufacturing agreements by November-end 2005. The company said that it is actively working on gaining a global footprint in the custom-manufacturing segment.

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