The Hindu Business Line : R&D spend fall boosts Dr Reddy's Q2 net

DUE to a marked fall in R&D and amortisation expenses as well as a sizable growth in other income, Dr Reddy's Laboratories Ltd has reported a substantial growth in net profit for the second quarter of current fiscal ended September.

The company reported a marginal growth of seven per cent in total revenues at Rs 580.3 crore (Rs 540.7 crore), while the net profit has increased by 72 per cent at Rs 89 crore (Rs 51.7 crore).

The R&D expenses during the quarter under review have come down by 29 per cent at Rs 44.4 crore from Rs 62.7 crore in the corresponding quarter of previous fiscal. The amortisation expenses have come down by 13 per cent at Rs 7.6 crore from Rs 8.7 crore. The company reported a growth of 24 per cent in other income at Rs 16.9 crore (Rs 13.7 crore). The other income for the quarter under review includes net interest income of Rs 14 crore, the company said.

The R&D expenses have come down by Rs 15.5 crore under the generics R&D partnership deal entered into with ICICI Venture, according to the company. In percentage terms, the R&D expenses have come down to eight per cent from 12 per cent in the corresponding quarter of previous fiscal.

Despite a fall in gross profit margin to 52 per cent from 55 per cent in the corresponding quarter of previous fiscal, the company could improve its operating profit margin to 12 per cent (10 per cent) thanks again mostly to fall in R&D and amortisation expenses.

Subsequently, the growth in other income helped the net profit margin improve to 15 per cent (10 per cent).

The company has attributed the fall in gross profit margin to decrease in contribution of revenues from the North America generics to the total revenues. Excluding the ICICI Venture partnership deal, the R&D expenses have come down by Rs 2.8 crore on account of lower bio-study expenses in generics, the company said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page