Granules India Posts 86 Per Cent Jump In Net Profit

Pharmaceutical company Granules India has come with a good set of numbers for the March quarter. It reported 57 per cent growth in topline and 86 per cent growth in bottomline. The growth has been very robust in all its business segments. The company has also announced dividend of Rs 2 on a face value of Rs 10 - a dividend yield of 1.98 per cent. The book closure date for the same will be from June 26 to July 2.

Though the company’s research and development expenses have declined during the quarter, its raw material expenses grew by a slightly higher rate, the impact of which was that its margins declined by 100 basis points. The interest expense rose by 51 per cent to Rs 4.8 crore compared to 3.2 crore in the corresponding quarter last fiscal. It however should be noted that in the December quarter Granules India paid a total interest of Rs 5.19 crore and hence on a quarter-on-quarter basis this expense item has declined.

For the full year the company’s business performance has been quite noteworthy. Its topline growth of 38 per cent to Rs 653 crore looks very satisfactory. Besides, due to the overall reduction in expenses, its net profit growth has improved by 43 per cent to Rs 30 crore. All its three business divisions i.e. finished dosages (FD), pharmaceutical formulation intermediate (PFI) and active pharmaceutical ingredients (API) have recorded growth rates of 83 per cent, 27 per cent and 20 per cent respectively.

On a consolidated basis, Granules India has a total debt of Rs 113.60 crore which has increased by Rs 30 crore in a year’s period. Despite this rise its debt to equity ratio is still comfortable at 0.46x. The inventories as a percentage of sales have remained flat, thus indicating that there are no issues related to the product off-take. As the company has reported a decline in its trade receivables as a percentage of sales, its cash position has increased from Rs 11.98 crore to Rs 31.98 crore. The profitability ratios such as return on equity (ROI) and return on capital employed (ROCE) also stand improved by over 150 basis points, indicating good returns on the shareholders’ investments.

The company has future growth drivers in place with a plan to expand its capacities. By June 2012 its FD capacity will stand three times its original capacity to 18 billion units. This business adds 33 per cent to the topline and has reflected a growth rate of 87 per cent in the year. With this ramp-up its revenues are set to rise in FY13. Also, the existing PFI capacity will be doubled to 18,000 tonnes and thus boost its sales. The PFI capacity will also be available by June 2012 as per a press release issued by the company.