The Hindu Business Line : Wockhardt Q1 net dips on US initiatives

The acquisition race coupled with discounts offered in the US have caused a dent in Wockhardt Ltd's performance for the first quarter or three months ended March 31, 2006.

The company's India operations posted a profit after tax of Rs 4.9 crore for the first quarter ended March 31, 2006, down 87 per cent as compared with Rs 38 crore for the quarter ended March 31, 2005. Total income has increased from Rs 212 crore in Q1 FY 2005 to Rs 264 crore for Q1 FY 2006.

Meanwhile, one-time write offs and expenses amounting to Rs 23 crore relating to inorganic growth initiatives and inadequate provisioning of charge-backs in the US for the previous period amounting to Rs 38 crore resulted in a (consolidated) net loss of Rs 3.7 crore, the company said in a statement issued after its board-meet on Tuesday.

Wockhardt's Indian operations took the impact of these initiatives taken in the US market and this is reflected in the 87 per cent dip in net profit for the quarter, a company official told Business Line.

"Our operations during the quarter resulted in a 44 per cent growth in operating profits," the Wockhardt Chairman, Mr Habil Khorakiwala, said in the statement. "Our core operations continue to do well. However, we took a hit on net profit during the quarter because of the one-time write offs. This, I take as a part of our US business learning curve," he added.

The group posted a loss after tax of Rs 3.7 crore for the quarter ended March 31, 2006, as compared with profit after tax of Rs 41.7 crore for the quarter ended March 31, 2005.

Total income has increased from Rs 318 crore in Q1 FY 2005 to Rs 354 crore for Q1 FY 2006.

Change in the US

There has been a change in leadership in the US, with Wockhardt's Executive Director, Mr Lalit Kumar, taking over as head of the US operations from January 1, 2006.

He would be relocating to the US soon. "Appropriate systems have also been implemented to ensure that charge-backs are properly accounted on timely basis," the note said.

Wockhardt shares closed, marginally up at Rs 465.30 on the Bombay Stock Exchange.