Manufacturer of active ingredients for the pharmaceutical industry Dishman Pharmaceuticals and Chemicals reported 21 percent decline in consolidated net profit at Rs 33.3 crore July-September quarter against Rs 42.3 crore, in the corresponding quarter last year.
Arpit Vyas, MD, Dishman Pharma is confident of meeting FY15 guidance. The company’s margins were down due to stock building but they are expected to pick up in the second half of this fiscal, he says in an interview to CNBC-TV18.
Below is the verbatim transcript of the interview:
Q: Can you tell us about both the segments marketable molecules and CRAMs and which one was weak this time leading to the overall weak performance?
A: There is a bit of a disconnect here. The numbers that we see here are very good. If you see quarter-on-quarter (Q-o-Q) basis, we have done good sales. The margin has gone down because we had to do some stock building for the projects that we are doing in the coming quarter. So those margins will pick up in the second half of the year.
Carbogin Amcis - as we have been consistently explaining to our investors and everyone that first two quarters are only working on development projects which have lower margins and now in the second two quarters they are going to be working only on commercial products as well the development work, so the margins are going to be picked up considerably. The other impact is that there is a bit of a stock building in the inventory of the raw materials, which we have to do for the project, which has given to me that is a very sizeable project for us and that revenue will be realised in the second half of the year.
Q: So when you say that the margins will improve in second half, what kind of margins are you targeting, will it come back to that 27-28 percent mark?
A: Yes. We are on track with our numbers. We have given a guidance of around Rs 1,500 crore. If you look at first half, we are at Rs 753 crore and we will get even better margins because the commercial products will be kicking in Carbogin Amcis as well as in India.
Q: Between the two segments, marketable molecules and CRAMs, what kind of growth are you estimating for the second half?
A: The marketable molecules namely Vitamin D3 we are doing extremely well. If you see the numbers of Vitamin D, we are at around 27 percent EBITDA vis-à-vis last year, which was around 16 percent with a profit after tax (PAT) margin of 20 percent that I expect to remain stable at the same level.
With the CRAMs business -- with the projects that we have in the pipeline, some of the projects giving us around 60 percent margin, so that will get us back to the levels of 27-28 percent by the end of the year.
Q: You said Rs 1,500 crore is your target for the revenues for all of FY15, so what would be your target for profits?
A: The profits would be minimum of Rs 125-130 crore.
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