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Venezuela takes toll on DRL net
City-based pharma major Dr Reddy’s Laboratories reported a whopping 86 per cent drop in net profit to Rs 74.6 crore in the fourth quarter ended March 2016, dragged down by provisioning towards write-off of receivables from the South American country of Venezuela.
Dr Reddy’s Q4 net nosedives by 86% to `75 cr; Revenues drop 3%
Hyderabad: City-based pharma major Dr Reddy’s Laboratories reported a whopping 86 per cent drop in net profit to Rs 74.6 crore in the fourth quarter ended March 2016, dragged down by provisioning towards write-off of receivables from the South American country of Venezuela. The company had posted Rs 518.8 crore net in the corresponding quarter a year ago.
Total revenues during the three-month period also slipped 3 per cent at Rs 3,756.2 crore from Rs 3,870.3 crore a year ago. The revenues were down on account of 18 per cent de-growth in Europe and 31 per cent fall in Emerging Markets in generics business. The company also registered 22 per cent fall in PSAI (pharmaceutical services and active ingredients) business globally led by the US market with 60 per cent downswing.
“As we have alluded to, we have not been getting as much repatriation of revenues from Venezuela as we are expecting. But we were getting some in some quarters. In Q3, we did not get anything. We had made provisions in this quarter for whatever cash we have in Venezuela. It was Rs 430.9 crore in the fourth quarter and Rs 508.5 crore for fiscal 2016.
It has affected the bottom line,” Saumen Chakraborty, Chief Financial Officer, Dr. Reddy´s, told media at the announcement of financial results here. He attributed fall in revenues during the quarter to drop in the PSAI business and some other factors. G V Prasad, Co-Chairman and CEO, Dr Reddy’s, said the company would continue to engage with the Venezuelan government provide affordable medicines, subject to the repatriation of funds.
"It’s been a challenging quarter for Dr. Reddy’s. While there has been a marginal decline in revenues, there has been a greater impact on profitability. This is mainly due to the provision, made as a matter of abundant precaution, to write down our outstanding receivables from Venezuela,” Prasad explained. As in the past, global generics, at Rs 3,077.4 crore, accounted for 82 per cent of the company’s total revenues in the fourth quarter, higher by two percentage points than a year ago.
