Sun Pharma to continue holding stake in Taro, says VP Fin

Pharma major Sun Pharmaceuticals reported a net profit of Rs 881 crore in its third quarter, up 32 percent year-on-year boosted by strong growth across its business verticals. The company's net sales also rose 33 percent to Rs 2,852 crore in Q3.

Uday Baldota, Senior Vice President-Finance & Accounts, Sun Pharma said the company will continue to hold stake in Taro despite the termination of their merger agreement. Disagreements related to the offer price hike led to the cancellation of the deal, he explained.
Besides, Sun Pharma has also closed the URL Pharma acquisition deal two week ago, informed Baldota.  Here is the edited transcript of the interview on CNBC-TV18. Q: One word on the calling off of the agreement with Taro. Are you disappointed as a management because you lost out on something that could have been an accretive agreement and what is the plan now with all the cash you had kept handy on your books?
A: There was a disagreement on the price. So it was most appropriate for both sides to call up the deal. In terms of usage of cash, I think we are continuing to look for acquisition opportunities in US and other markets. As and when we find something, we will put the cash to use. Q: What is the plan with Taro now going forward, you just keep it as a company in which you have a significant shareholding, that is it?
A: Currently, that is the plan. Q: What do you expect in terms of revenue contribution from some of the other arms like URL Pharma or DUSA?
A: DUSA is a public company so people know the numbers. Roughly, it annualises at about USD 50 million a year. Clearly, there is opportunity for us to grow that business.
We just closed the URL transaction a week back. There are lots of products that they have, about 107 products. We need to find a way about growing the business from where it is. But, we are quite excited about the business. Q: You have had a really strong year so far, it is looking like you are going to beat the guidance that you set out for FY13. Can you give us the sense of how FY14 is shaping up given the fact that some of these acquisitions will start kicking in harder?
A: There were some high points in FY13. I would like to highlight two-three things. One is Taro’s performance has been quite strong. Two, the average exchange rate this year, that is the rupee has been at 54-55 per dollar compared to what it was the previous year. To that extent, it has benefitted the top line. The other thing is we have been able to sell a product called Lipodox in the US for practically the whole of the year.
In Q4 of last year we had a high base. From that perspective, this year we have done better. Next year, we need to look at all of these one time factors and see what we can guide the market towards. Hopefully, by May when we announce the final results, we should be able to give guidance for FY14. I don’t have a specific number or a range right now. Q: Any room at all for renegotiation on Taro or is that a closed chapter?
A: It is a closed chapter. Q: What are your expectations from the domestic market, there seems to be some sluggishness creeping in there? Though you outperformed the industry this quarter, any worries on that front?
A: It is a bit premature to get worried on the domestic front. We need to look at data for a few more months and then conclude whether there is a real slowdown or not. As far as our business is concerned, we haven't seen anything dramatic as yet. But, I wouldn't conclude either way.