The Hindu Business Line : Strides Q3 net down 97% on rupee rise

Bangalore, Oct 31 The rising rupee has pulled down the net profit of Strides Arcolab 97 per cent to Rs 0.25 crore during the third quarter (third) ended September 30, compared to Rs 8.93 crore during Q3 of 2006.

Net sales were Rs 105.8 crore, 10 per cent lower year on year.

The US operations have been in particular disappointing and reviewed by a special committee formed by the board. A final proposal on the options on the US operations has been received. An announcement is now expected by December 5.

“The US operations continue to disappoint,” the Strides Vice-Chairman and Managing Director, Mr Arun Kumar, said in a statement. “Even though revenues improved in the third quarter, EBITDA dropped due to the appreciating rupee and lower than normal R&D revenues that badly hurt our operations,” he said. The acquired businesses, however, are stabilising and expected to deliver.

The pharma export major said the rising rupee affected revenues while the US operations in particular dipped Rs 7 crore due to poor capacity. There was also an additional interest cost of $1.5 million for capacity expansion of sterile products besides higher staffing costs.

TIE-UP WITH SAGENT

Strides Arcolab Ltd announced an agreement with Sagent Pharmaceuticals Inc to jointly develop, supply and market over 25 injectable products in the US market. Sagent will market the products developed by Strides in the US.

“This strengthens our plans to become a significant sterile player in the US markets,” Mr Arun Kumar said.

The consolidated net loss for the quarter was 9.03 crore (versus profit of Rs 11.46 crore year on year) and consolidated revenue was Rs 218 crore (Rs 182.6 crore), a growth of 19 per cent. Nine-month profit was Rs 9 crore and sales Rs 568 crore.

The Strides board at its meeting on Tuesday in-principle approved the proposal to merge its wholly-owned subsidiaries - Quantum Life Sciences Pvt Ltd and Medgene Pharmaceuticals Pvt Ltd - with itself, subject to approvals.

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