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Business EconomyPosted at: Nov 12 2021 10:20PM


Granules Q2 profit down 51 pc YoY to Rs 81 cr

Hyderabad, Nov 12 (UNI) Drug maker Granules India on Friday reported a 51 percent year-on-year decline in July-September net profit at Rs 81 crore compared with the Rs 164 crore of the corresponding period of the previous fiscal.
Income from operations at ₹888 crore (₹858 crore) was 4 percent higher year-on-year and the operating profit for the period decreased 41 per cent year-on-year at Rs 151 crores against Rs 256 crores of the corresponding period in the previous year, said Granules, a vertically integrated fast growing Indian pharmaceutical company headquartered at Hyderabad, in a statement here.
Granules Q2 business was unfavourably impacted due to difficulties in procuring raw materials, mainly from China due to Chinese dual energy policy and increased procurement prices for almost all items due to interruptions in supply of materials and increased logistics costs arising out of vessel shortage and port congestion in various parts of the world.
Gross margin drop from 57.9 percent to 50.9 percent was on account of reduction in margins of all major products especially Paracetamol due to increase in KSM prices and increased logistics cost, the release said. Price pressure in the USA has also resulted in marginal drop in Gross margin for core products. The entire loss of Gross margin for the current quarter was mainly absorbed by Granules. We expect to pass on some of the increases to our customers from Q3FY22 onwards, it said.
Pharmaceutical Formulation Intermediates (PFI) segment grew 10 percent YoY, Finished Dosage (FD) grew 18 per cent YoY and Active Pharmaceutical Ingredients (API) segment decreased by 25 percent YoY mainly due to Paracetamol KSM supply disruption.
The Board of Directors has declared its second interim dividend of 25 paise per equity share of INR 1 each.
Commenting on the results, Granules Chairman and Managing Director Dr Krishna Prasad Chigurupati, said, “The last quarter was one of the most challenging quarters that we have witnessed in the recent past. We were unable to pass on our cost increases to our customers.
Based on ongoing discussions with customers, we are confident of passing on our price increases substantially from Q3FY22 onwards. We expect that our gross margins will see a recovery and we believe that our performance for the rest of the fiscal will be substantially better, he said.
We have been taking all necessary measures to de-risk ourselves from supply chain disruptions and expect to see these efforts bear fruits next fiscal onwards.
Due to the current volatile and uncertain environment, we believe that we will not be able to meet our guidance, and it will not be prudent on our part to give any future guidance until the situation becomes stable.
All our projects and plans are on track, and I am very confident that the current fiscal will be a one off thing and not affect our long-term growth strategy and aspirations, he added.
The company has 7 manufacturing facilities out of which 6 are located in India and 1 in USA and it is one among the few pharmaceutical companies in the world to be present in the manufacturing of entire value chain – from Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) and Finished Dosages (FDs).
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