Ranbaxy
Despite all the US FDA issues and the company posting a loss for Q4 ended 31st Dec’13, the stock price of the company ended in the green yesterday. This was mainly on the back of improved consolidated EBITDA, which jumped up almost three times to Rs.270 crore from Rs.81 crore (YoY). There was improvement in EBITDA margins too, by 630 bps to 9.3%. But this could be attributed to be lower operating expenses while consolidated net sales rose to Rs.2860 croe from Rs.2670 crore in Q3FY13. Branded and OTC category contributed Rs 1,480 crore accounting for 52% of total sales while generics including API category recorded Rs 1,380 crore of sales during the quarter.
The company posted a consolidated net loss of Rs.159 crore for Q4FY14, which came in lower than the net loss in previous quarter of Rs.487 crore. This loss was on account of Rs.257 crore it had to provide due to inventory provision for Toansa. This was the fourth facility, its main API facility which has come under the US FDA scanner. Prior to this, three of its remaining facilities at Mohali, Dewas and Poanta received USFDA import alert. Thankfully, the company had a forex gain of Rs.104 crore and this helped contain the loss.
Stock price is in the green but what remains worrying is the consistent red mark coming in on account of US FDA. And these were not made on flimsy grounds as many suggest. The latest, at Toansa, the FDA made 8 observations during the Jan. 5 through Jan. 11 inspection. The FDA said that workers at the plant had been retesting products that failed analytics until they got the results that were needed, overwriting the old results in its database. Proper analysis procedures were not followed, and equipment was not properly calibrated. The FDA inspectors noted a dripping refrigerator where samples were stored and windows that could not be closed, letting in flies. It is shocking that such lapses remained uncorrected despite other three units already being under FDA scanner.