Cipla net dented by lapse of tax benefits, depreciation

Drug-maker Cipla saw a dip in net profit due to the expiry of tax benefits to export-oriented units, and increased depreciation, among other things.

While operating margins have increased substantially (Rs 32 crore) due to better utilisation of its Indore Special Economic Zone and changes in its product mix, the company's profits after tax was lower by close to 2 per cent.

This was because of the increase in depreciation (Rs 15 crore) due to additions to fixed assets, largely at the Indore SEZ factory, higher tax (Rs 11 crore) due to expiry of tax benefits on export-oriented units, marginal increase in interest cost (Rs 4 crore) on working capital loans, and decrease in other income (Rs 5 crore), the company said.

During the quarter, Cipla's domestic sales grew by about 10 per cent and export sales grew by more than 8 per cent. Material cost decreased by about four percent on an annual basis due to changes in product mix primarily due to lower proportion of anti-retrovirals in formulation exports, the company said.

Excise duty on sales had increased by Rs 10 crore due to increase in duty rate by one per cent and increase in dutiable clearances. The increase in staff cost (Rs 34 crore) is due to annual increments and increase in manpower. Other expenditure had increased mainly due to increase in selling expenses and factory expenditure such as repairs and maintenance, power, fuel etc. The increase in selling expenses is in line with the increase in turnover, the company said.

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