Strides Arcolab quarterly report: Net profit drops by 80% in Q4 08-09

The Bangalore-based Strides Arcolab has posted  a 80 per cent drop in its net profit to Rs 10 crore for its first quarter ended March 31, 2009 as compared to the corresponding period last year.

Strides Arcolab’s  topline grew by 22.6 per cent to Rs 291.6 crore.  Operating profits fell by a marginal 4.5 per cent to Rs 32 crore.

Strides Arcolab said profitability of its international operations have been impacted by devaluation of local currencies.

During the corresponding first quarter of 2008, Strides Arcolab had an exceptional income of close to Rs 60 crore by divesting around 50 per cent in its Latin American operations, the company said explaining the reasons for the loss of profits this financial year.

Strides has about 40 subsidiaries globally. The restructuring will see several of these being merged into the three major entities. This will allow Strides to go for strategic sourcing and realignment at the international level for optimisation of its capabilities, the company stated.

Strides reorganisation will see four of its Indian subsidiaries being merged with the parent company.

“The reorganisation is a major step to attain greater efficiency and accountable, customer-focused business units, while still retaining the aggressive and entreprenerual spirit of Strides. Both our business units will be backed by a strong and independent R&D function,” said Group CEO Arun Kumar.

Recently, Strides had spun off its R&D division into a separate entity, Dr Reddy’s, Piramal Healthcare and Sun Pharma as part of its strategy to protect the company’s core businesses.

The new R&D entity of Strides expects to generate its own revenues through in-licensing and out-licensing deals. “We have a huge pipeline of research products. Hiving off our R&D business can unlock that value,” according to company officials.

Strides had annual revenues of Rs 1,377 crore in 2008, the bulk of which came from its pharma business.

Established in 1990, Strides is one of India’s leading integrated manufacturer and exporter of finished pharmaceutical dosage forms – both branded and generic. Strides is a significant global player in soft gelatin capsules and sterile parenterals. Strides has 13 manufacturing plants in India, Singapore, Brazil, Mexico, Poland and Italy. Strides has marketing presence in 55 countries.