Marksans Pharma (MARKSANS) Q4 10/11 earnings summary

Executive summary

• FY2010-11 turnover fell 22.1% to Rs. 15,543.76 lakh, mainly after the API business sale; net loss was Rs. 21,778.91 lakh, driven by sale loss and FCCB charges.

• Excluding the API sale loss, FCCB redemption premium and FCCB foreign-exchange loss, formulation operations were described as gradually improving.

• The balance sheet faced severe pressure: FCCBs remained in default and net worth was fully eroded at 31 March 2011; a BIFR reference was planned after AGM adoption of accounts.

Financial highlights

• Standalone sales were Rs. 15,543.76 lakh vs Rs. 19,956.21 lakh in FY2009-10; decrease attributed mainly to the API business disposal.

• Net loss was Rs. 21,778.91 lakh vs net profit of Rs. 28.98 lakh; charges included Rs. 8,663.88 lakh API sale loss, Rs. 9,017.33 lakh FCCB premium and Rs. 2,363.45 lakh FX loss.

• Consolidated turnover was Rs. 30,531.80 lakh vs Rs. 35,936.58 lakh; consolidated net loss after tax was Rs. 22,324.45 lakh vs Rs. 1,004.35 lakh.

• Standalone cost of sales decreased to Rs. 11,820.51 lakh from Rs. 15,954.99 lakh; administration, selling and distribution expenses increased to Rs. 2,924.44 lakh from Rs. 1,593.52 lakh.

• Interest and financial charges rose to Rs. 10,576.67 lakh from Rs. 1,477.83 lakh, including the FCCB redemption premium; no FY2010-11 tax provision was charged.

Outlook and guidance

• Management expected satisfactory performance in coming years, with greater focus on formulation business and growth from global presence, low-cost manufacturing and regulatory-approved capacity.

• International formulations were expected to benefit from further US ANDA approvals, complex and niche product development, European registrations and expansion in semi-regulated markets.

• R&D priorities included new generics, ANDAs and dossiers for regulated and emerging markets; development costs of Rs. 791.39 lakh were capitalized as intangible assets during FY2010-11.