IndiaSector Review09 May 2011
Net Income too showed a 40% growth on a y-o-y basis due to the increasedPBT due to sale of certain rights related to one of its product. The NetIncome for Cipla Ltd. Stands at Rs. 10,826 million as of March 2010, therebycrossing the coveted Rs.1 billion mark for the first time in it’s history.
EPS:-Significant decrease in EPS in the year 2007 was because of the increasednumber of shares due to a scrip issue of 3:2 declared in April 2006. The EPS,since then, has increased consistently. The sharp increase in 2010 was dueto the increased profit attributable to a one-time revenue for the sale of intellectual property rights..
Net sales have increased consistently over the years. However, the growthrate has decreased on a y-o-y basis. This decrease in growth rate isattributed to the high base figure which is ever increasing. The driver for netsales is the domestic demand growth which is steady at 10% and the exportgrowth lingering between 12% to 14% y-o-y. The sharp decrease in growthrate in 2010 over 2009 is chiefly due to the non-availability of important raw-materials, lower tender business in anti-retrovirals and unfavourablemovements in foreign exchange rates.
Other Income largely consists of technical know-how fees and exportincentives along with other investments and miscellaneous income. OtherIncome dipped slightly to -0.3% on a y-o-y basis. This was basically due tothe high base figure in 2009, wherein the company received a one-timetechnical know-how fee. However, the export incentive increased by around70% to Rs. 924.1 million which relatively off-sets the effect of the decreasein the fee received.
Material Costs have consistently been decreasing which is a good sign.However the sharp decreased in 2010 was an exception as it was due to theunavailability of important raw materials. However, the advantage due todecreased material cost is negated by the increase in manufacturing costs, asa result of which, the cost of goods sold remains unchanged.
Growth in the ‘Research and Development expense’ decreased by over 60%to show a 6.5% y-o-y growth vis-à-vis 15.5% in 2009. A major reason is theincrease in the revenue expenditure eligible for weighted deduction under theIncome tax act.
Other expenses dipped by 10% majorly due to a decreased loss in foreignexchange owing to comparatively lower fluctuations in the value of Rs vs.USD vis-à-vis 2009.
Profit before tax showed a whopping 48% growth to Rs.13261 millions in2010 as opposed to Rs. 8955 million due to the sale of intellectual propertyrights and technical know-how of “i-pill”, an emergency contraceptive pill toPiramal Healthcare Limited, for the territory of India, for the aggregateconsideration of Rs.950 million.