Pharma major Dr Reddy’s Laboratories consolidated net profit plunged 86 per cent at ₹74.6 crore in the third quarter ended March 31, 2016, against ₹519 crore earned in the corresponding quarter of the previous financial year.
The revenue of the Hyderabad-based company declined 3 per cent to ₹3,756 crore (₹3,870 crore). The adverse impact on profitability and on the revenues was “mainly due to the provision to write down our outstanding receivables from Venezuela,’’ GV Prasad, Co-Chairman and Chief Executive Officer, told newspersons at a press conference here on Thursday.
The company had not received approvals from the Venezuelan government to repatriate any amount beyond $4 million already received during the year due to a severe balance of payments crisis the country is facing. As a result, the adverse impact for the fourth quarter and financial year 2015-16 was ₹430 crore and ₹508 crore, respectively.
According to Saumen Chakraborty, Chief Financial Officer, Dr Reddy’s despatches to Venezuela were stopped. “We are actively engaged with the Venezuelan government and not exited from that country,’’ he said. In future transactions”, the firm will insist on delivery of drugs only after receiving payment and is talking to two government companies. The Ukraine market is also ‘being closely watched’ for possible trouble and risk mitigation, he added.
For the full year, revenue went up by 4 per cent at ₹15,470 crore (₹14,818 crore) with a 10 per cent decline in profit at ₹2,001 crore (₹2,217 crore).
The growth within global generics in the US, Europe and India was at 19 per cent, while revenue declined 25 per cent in the emerging markets on account of depreciation of the rouble. The calibrated sales in Venezuela led to 28 per cent dip in revenue from the rest of the world. The expenditure on capex and R&D was ₹1,193 crore and ₹1,783 crore, respectively.
The company expects good number of launches from the second quarter of the current financial year. Prasad said that biosimilar business was gaining traction and company started to receive approvals and building partnerships in the emerging markets.
With regard to warning letters received by the company from the US FDA on three of its facilities earlier, he said remediation work in the facilities was completed up to 50 per cent and the US regulator will be informed of the progress in a few months from now.
The board of directors has recommended a final dividend of ₹20 (400 per cent) per equity share of ₹5 face value for the financial year 2015-16. Dr Reddy’s scrip gained 3.65 per cent on the BSE on Thursday to close at ₹2973.85.