The Hindu Business Line : Strides suffers Rs 56-cr net loss

Bangalore, July 23 Strides Arcolab suffered second-quarter loss of nearly Rs 56 crore year-on-year on a standalone basis largely due to currency fluctuations and the MTM (mark to market) impact. In the second quarter of FY07 it had posted a net profit of Rs 10.18 crore.

On a consolidated basis, the Bangalore-based specialty pharma company was hit by a Rs 48-crore loss. This was in spite of an all-time high group revenue of Rs 269 crore, up 49 per cent year-on-year, and EBITDA of Rs 55 crore.

It said it adopted a US dollar conversion rate of Rs 42.85 for Q2 against Rs 40.74 for the same quarter of last year, resulting in an MTM loss of Rs 28 crore.

Mr Arun Kumar, Vice-Chairman and Group CEO, said: “By any measure, Q2 2008 was an outstanding operating quarter. The achievements in the quarter go beyond the bottom line, as much has been done to set the foundations for future growth. (Consolidated loss) at Rs 48 crore has been (caused) by exceptional factors relating to the restatement of FCCBs and ECB borrowings and provisioning of MTM loss to the extent of Rs 28 crore.”

“Exceptional items for the quarter is a loss of Rs 77 crore due to unrealised exchange loss on restatement of foreign currency borrowings including FCCBs and provisioning of MTM loss, as compared to an unrealised gain of Rs 15 crore in Q207,” the company said.

Nod for merger

The board approved the merger of three subsidiaries: Grandix Pharmaceuticals Ltd, Grandix Laboratories Ltd and Global Remedies Ltd.

Australian acquisition

Its acquisition of 55 per cent share in Genepharma Australasia P Ltd (GAA) of Australia has been approved by GAA’s shareholders. Strides will now be the fourth largest generics player in Australia with the combined regional business worth nearly A$100 million on closing the deal.

The companies plan to enter into a five- year supply agreement. Any existing Strides supply arrangements in the region will have the first right of refusal to distribute all existing and future Strides products (other than products for treatments of AIDS, tuberculosis and malaria) into Australia, New Zealand and the Asian regions excluding Japan and China — where GAA will have the non-exclusive right to supply Strides’ products.

Strides began shipments to North America including the US and Canada. “With a robust filing and approval pipeline, we are confident of ramping up this business with our niche product strategy and derisked partnership model for the US markets,” Mr Arun Kumar said.

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