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Despite improvement in its operational performance, Ranbaxy posted loss of ₹159 crore for the December quarter.
This was mainly due to inventory write-off worth ₹258 crore at its Toansa plant (Punjab), following a ban on exports from the plant to the US. Mitigating the loss though was a forex gain of ₹104 crore on foreign currency hedges.
The loss on the bottom-line conceals Ranbaxy’s good performance on the operating front.
Healthy demand for its innovative acne drug Absorica in the US and pick-up in drug sales in the domestic market helped the company improve its operating margin to 9 per cent from 8.3 per cent in the September quarter.
With about 17 per cent share of the acne market in the US, Absorica helped Ranbaxy grow sales in the geography by 18 per cent in the December quarter.
On the home turf too, the company managed to grow revenues by 8 per cent, thanks to the recovery in the domestic market.
This is despite a face-off with drug distributors demanding higher margins.
But sustaining the operating margin at high levels may be tough for two reasons.
One, the company will have to incur additional costs to bring its Toansa facility back on track.
Two, Ranbaxy will have to spend more to procure active pharma ingredients for its US business. Resolution of these issues will be critical for Ranbaxy’s growth prospects.
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