The Hindu Business Line : Exports not affecting domestic formulations biz: Alembic

Alembic has come out with the fourth quarter numbers of FY07. The company has reported a net profit of Rs 11 crore as against Rs 17 crore in the corresponding quarter of the previous year.

Mr Chirayu Amin, CMD, says the company's FY07 profit stands at Rs 88 crore against Rs 83 crore (before recurring). He added that the company has settled all dues with ONGC. Alembic's FY07 PBT stands at Rs 70 crore (Rs 83 crore), while its FY07 PAT stands at Rs 70.7 crore. He adds that the company's exports are not at the cost of domestic formulations business. He expects the topline to grow to around Rs 1,000 crore in FY08.Excerpts from CNBC-TV18's exclusive interview with Mr Chirayu Amin:

Why is there a hit on the margin? What are the reasons for the slightly lower net profit?

Let me talk about the whole year. Our margins were under pressure and we did some preparatory work for getting into the regulatory area and doing supply chain for large multinationals. Some of our production capacities had to be sacrificed for preparation of this and that too affected us.

Can you tell us about your full-year earnings as we do not have your full year profits and sales numbers?

The profit before non-recurring item was Rs 88 crore compared to Rs 83 crore of the previous year. We had a non-recurring expense of VRS of about Rs 7.82 crore and also the interest to ONGC was Rs 9.77 crore; so, these two items were non-recurring.

We have also finally settled all our dues with ONGC; so there are no liabilities pending with them. There was a full and final settlement. Profit before taxes was at Rs 70 crore compared to Rs 83 crore and PAT was Rs 70.68 crore.

Tell us about the preparatory efforts you were making towards some regulatory approvals. In which country, for what products and for which companies are you working?

I cannot disclose the name of the company and the product but it would be mainly for the US markets. It would be a supply chain for the large companies. That is the preparatory work we are doing in our plant.

The branded business as a percentage of sales has gone up from 47 per cent to 55 per cent, while the exports have halved from about 10 per cent to about 5.5 per cent. Is it a conscious shift that you want to reduce exports and increase the focus on branded products? Could you give us the margins on each of these segments?

We have been looking at our current year, where exports would be much more robust compared to last year. We are not sacrificing the domestic formulation business. It is going good and after an acquisition of Dabur, we expect to do a robust growth in our current year.

How do you expect your exports to pan out for the year 2008 and even sales and profits?

I can give sales and profit guidance but we will be doing much more better than what we did last year.

Will you beat Rs 1,000 crore on the topline and Rs 200 crore on the operating levels?

I hope to achieve that.

Between you and Alembic Glass, you own about 130 acres each in Baroda. Do you have any specific plans for that?

I will talk about Alembic because Alembic Glass does not exist; it is a delisted company. But for Alembic, yes, in Baroda we do have a real estate.

Can you take us through some details about that real estate - the amount of land you own and what plans you have to develop it or otherwise?

We will slowly try to unlock this asset for the company. We have no concrete plan for now but definitely when a good opportunity comes, we will try to do that.

What is the total land and the asset value as of now?

We do not have much asset value because they are historically valued and the current valuation would be speculation on my part.

Is 130 acres correct?

That is overall where our plant and everything is situated. It is not excess land.

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