Drug-maker Cipla has said that rationalisation of its products and markets have reduced the company's material cost by close to five per cent, compared year-on-year.
“While such measures would result in increased margins, there could be an adverse effect on revenues in the short term,” the company however, cautioned.
Its material cost stood at Rs 715 crore (or 41 per cent of its sales) for the three months ended December 31, 2011. This was against the previous year's material cost of Rs 695 crore, (or 45 per cent of sales), Cipla said.
During the quarter under review, Cipla's domestic sales grew by more than 18 per cent, at Rs 868 crore compared to Rs 733 crore in the corresponding period in the previous year. Export sales grew by about 11 per cent, at Rs 865 crore for quarter under review against Rs 781 crore for the quarter ended December 31, 2010.
The increase in staff cost at Rs 52 crore was due to annual increments as well as increase in manpower and is in line with the previous quarter, the company said.
Other expenditure increased by about Rs 56 crore, largely on account of an increase in selling expenses, professional fees and factory expenditure such as repairs and maintenance, power and fuel, it added.
The increase in selling expenses is in sync with the company's increase in turnover. Tax for the current quarter has increased due to expiry of tax benefits on Export Oriented Units, it added.
Cipla shares closed at Rs 342 on the BSE, down close to 2 per cent on Monday.