Cipla reported a modest third quarter performance. While its topline grew by about 13 per cent to Rs 1,758 crore over the year, it fell by a per cent sequentially as the company is rationalising its business, markets and product segments (renegotiating prices also). Therefore, while profits grew by about 16 per cent to Rs 270 crore over the year, it fell by about 12.6 per cent sequentially.

Operating profit margins (OPMs) also met with a similar fate. OPMs improved by about 1.8 percentage points to 22.3 per cent over the year, helped by a fall in raw material costs. Raw material cost as a percentage of sales improved from 45.9 per cent last year to 41.2 per cent now. However, OPMs reported a sequential drop of about 2.3 percentage points driven by an increase in staff cost and reduction in technical fees. With the benefits of rationalisation expected to trickle down to the operating level in the next couple of quarters, margins should see an improvement going forward.

Cipla reported a forex gain of about Rs 4.5 crore (Rs 3.4 crore last year).

Segment performance

Exports grew by about 11 per cent to Rs 866 crore. In that, while export formulations grew by 9 per cent, the APIs (active pharmaceutical ingredients) segment registered a growth of 18 per cent. Antiretroviral (ARV) sales were about Rs 41 crore for the quarter. The management expects ARV sales to get streamlined in a couple of quarters.

The Indore SEZ contributed to about Rs 130 crore of sales during the quarter. The management expects the facility to contribute Rs 600-700 crore for the year. Its approval from the US Food and Drug Administration is expected to come in the next 1-2 years.

Domestic sales registered 18.4 per cent growth to Rs 869 crore, driven primarily by its generic generic business (36 per cent growth).


Cipla has filed 11 products in the EU market in the inhalers business. Of these, it has received four product approvals, while the rest are in various stages of approval. The management expects the approvals to come in the next couple of years.

(This article was published on February 13, 2012)
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