Refinement in computing upsets profit by Rs 75 cr
Sun Pharma is set to spin off its domestic formulations business, including assets related to the business, into its wholly-owned subsidiary Sun Resins & Polymers Pvt Ltd, the company said after its board approved the decision.
The move is to enhance focus on the business and allow for quicker responses to competitive market conditions, Sun said, without giving details.
The view from the analyst world is divergent on whether Sun’s move was a prelude to bringing in a foreign partner or even sale at a later date. A Sun representative, however, maintained the move had to do with streamlining operations and making the company more efficient.
The subsidiary is a defunct company in the group, and its name would be changed to reflect the pharmaceutical nature of the operation, after the domestic medicines business is transferred into it, a company official said. The move would be effective from March 2012, after the company gets shareholder and regulatory approval, the company said.
At the company’s board meeting on Friday, approval was also sought for the likely delay in presenting the accounts of 2011-12 to shareholders after this rationalisation. This is required to redraw accounts, and allow for audit of these revised accounts for the year ended March 31, the company said.
On its performance for the three months ended June 30, Sun said, its profits would have been higher by Rs 75 crore. There has been a refinement in the basis of computing the cost of materials consumed and changes in inventories. And had this refinement not been carried out, the profit would have been higher, the company said.
Sun Managing Director, Dilip Shanghvi, said, in a statement, that the year had begun well, as the company reported strong underlying growth across all our business segments.
Domestic, overseas sales
The company’s sale of branded prescription formulations in India stood at Rs 588 crore, down eight per cent from the first quarter (Q1), last year. The lower reported growth this quarter is on account of higher sales in the last quarter of the previous year, the company said.
Sun’s sales in the US were $285 million for the first quarter of FY13, up 105 per cent, and accounting for 57 per cent of the company’s sales. Sale of finished medicines in the rest-of-the-world-markets outside of India and the US clocked revenues of $68 million in the quarter under review, a growth of 20 per cent.
The company’s board also approved an interim dividend of Rs 4.25 for a share of Re 1 each for the year ended March 31. Sun shares were marginally down on Friday, at Rs 675 on the BSE.