Torrent Pharmaceutical's consolidated sales stood at a record Rs 1001 crore during the year ended March 2006, up by 77 per cent from Rs 565 crore during the previous year. Consolidated international sales grew by 215 per cent, from Rs 137 crore in the previous fiscal to Rs 431 crore during the year. Improved performance in Europe, Brazil and Russia and sales from Heumann Pharma GmbH & Co Generica KG, Germany (Heumann), which was acquired by the company in July 2005, were the major drivers of this growth. Excluding the sales of Heumann, the organic growth in international sales for the year was 91 per cent. The share of international sales in consolidated sales increased to 43 per cent from 24 per cent in the previous year.
The domestic formulation business registered sales of Rs 444 crore as against sales of Rs 333 crore during the previous year, registering a 33 per cent growth.
"Crossing the Rs. 1000 crore mark in sales is a key milestone in the growth process of the company. With a critical mass in place, we are eager to exploit both organic and inorganic routes to fuel further growth," says Sudhir Mehta, chairman, Torrent Pharma.
Consolidated operating profits (PBDIT) were also at a historic high of Rs 108 crore, showing a growth of 46 per cent from Rs 74 crore in the previous year. Consolidated net profit for the year stood at Rs 51 crore against Rs 49 crore during the previous year. This growth in net profit was lower due to higher depreciation charge on account of commissioning of new manufacturing facilities, higher deferred tax expense and a one time exceptional write off.
For the quarter ended March 2006, the consolidated sales of the company grew by 104 per cent to Rs 248 crore from Rs 122 crore in the corresponding period last year. This was driven by a strong growth of 175 per cent in International sales (excluding Heumann sales, 57 per cent growth) and 71 per cent in the Domestic formulation business (adjusting for VAT related impact in the comparative quarter the growth is 14 per cent). Consolidated operating profits (PBDIT) of Rs. 14 crore was adversely affected by higher manufacturing costs on account of the new manufacturing facilities at Baddi, Himachal Pradesh, increased marketing spend and loss from Heumann.
During the year, Torrent Pharma's Board approved the proposal to split the face value of its equity shares from Rs. 10 to Rs. 5 and to issue bonus equity shares in the ratio of 1 bonus share for every share on a post-split basis. The Board has recommended an increased dividend of Rs. 2.5 per share for the year subject to approval at the ensuing AGM.
Adjusting for VAT spillover, the domestic formulation sales grew by 16 per cent during the year. In order to tap increasing business opportunities, Torrent Pharma launched two new divisions in CNS segment during the year and one more division to sharpen focus on the Diabetology segment. Improvement in productivity of sales force and expansion in sales force will drive the growth in fiscal 2006-07. Shifting of production for domestic brands to Baddi, Himachal Pradesh will see substantial improvement in margins for the current year due to the fiscal benefits.
Brazilian operations showed an impressive growth of 95 per cent with sales up to Rs 116 crore from Rs 60 crore. The drivers of sales growth include expansion of geographical reach as also increase in its sales force in the existing geographical areas to improve doctor coverage on the back of robust product pipeline.
The performance in the Russian markets (including the CIS countries) showed a quantum jump during the year with a growth of 185 per cent up from Rs 13 crore last year to Rs 37 crore this year. While past investments in sales promotion and establishment of effective marketing organization paid dividends in Russia, entry into other CIS countries like Ukraine and Kazakhstan also bolstered the sales.
During the year Torrent Pharma filed 4 ANDAs and 3 DMFs with US FDA as part of its US operations. Torrent proposes to submit 8 ANDAs and 3 DMFs in the coming year. Wholly owned subsidiaries were incorporated in Japan, Mexico and Australia to intensify focus on untapped territories.
Significant investments are being made to expand the existing R&D infrastructure. During the year, the total revenue expenditure on R&D was 5.8 per cent (previous year 9.2 per cent) of consolidated net sales and operating income. The strength of scientific staff has been increased to 539. The expanded R&D laboratory space will become available in 2006-07 and will boost the product development efforts for the developed markets. In the domestic markets too, the R&D activities are expected to provide the necessary impetus to introduction of many new products in the coming years.
The Board has approved raising of up to USD 150 million by issuing equity or equity-linked securities in the domestic and / or overseas capital markets. The funds are meant to finance prospective acquisition opportunities in chosen markets.