The financial performance of eight multinational companies (MNCs) in India remained stagnant during the year 2008 with growth of their sales and profits worked out to single digit only. The net profit increased marginally by 1.9 per cent to Rs 1,295 crore from Rs 1,271 crore in the previous year. The net sales of eight MNCs improved only by 9.4 per cent to Rs 5,107 crore from Rs 4,670 crore. The net margins were under pressure and the net profit as percentage of sales declined to 25.3 per cent from 27.2 per cent in the 2007.
The profit before depreciation, interest, taxation and adjustments (EBDIT) of eight companies viz, Abbott India, AstraZeneca Pharma India, Aventis Pharma, Fulford (India), GlaxoSmithKline Pharma (GSK), Merck, Pfizer and Solvay Pharma increased by 8 per cent to Rs 1,536 crore from Rs 1,422 crore in the previous year.
Three Indian pharmaceutical companies became multinational during last couple of months. At present there are 13 MNCs operating and listed on the Indian stock exchanges, which includes Ranbaxy Laboratories, a subsidiary of Daiichi Sankyo of Japan with effect from November 2008, Matrix Laboratories, a subsidiary of Mylan Inc from January 2007 and Fresenius Kabi Oncology, which acquired major stake during August 2008 of Dabur Pharma. The study does not include these three companies as they have not completed the full year of operations after acquisition. Novartis India and Wyeth are closing their accounting year in March 2009 and not included in the aggregate working.
If Ranbaxy Labs is included in the study, the net profit of the nine companies could decline by 86.1 per cent to Rs 262.27 crore from Rs 1,888.42 crore in the previous year as Ranbaxy suffered heavy standalone net loss of Rs 1,032 crore as against net profit of Rs 617.72 crore in 2007. The loss is mainly due to foreign exchange provision of Rs 1,959 crore as compared to gain of Rs 552.10 crore. The company's EBDITA improved by 38.6 per cent to Rs 602.11 crore and PBT by 49.6 per cent to Rs 332.46 crore during the year ended December 2008.
GSK has recorded highest sales among the MNCs, excluding Ranbaxy, at Rs 1,660 crore during the year ended December 2008 as against Rs 1,577 crore in the previous year. Aventis Pharma remained at second spot with net sales of Rs 983 crore and Pfizer at third position with net sales of Rs 682 crore. Abbott's net sales went up by 12 per cent to Rs 666 crore and that of Merck increased by 23.7 per cent to Rs 389.46 crore.
On the profitability front, Abbott India, Fulford (India), Pfizer and Merck suffered setback and their net profit declined by 8.1 per cent, 9.5 per cent, 11.9 per cent and 8.4 per cent respectively to Rs 62.87 crore, Rs 19.73 crore Rs 299.58 crore and Rs 73.01 crore. Pfizer's consolidated net profit declined mainly due to VRS expenditure and lowers other income of Rs 70.11 crore during the year ended November 2008 as against Rs 319.10 crore in the last year. The company divested its Consumer Healthcare Business during June 2006 to Johnson & Johnson. AstraZeneca Pharma, Aventis Pharma and Solvay Pharma achieved better growth in profit of 20.1 per cent, 15.1 per cent and 16.6 per cent respectively.
The MNCs have declared handsome dividend as their promoters are holding larger stake. AstraZeneca Pharma maintained equity dividend at 750 per cent for the year ended December 2008. The promoters are holding 90 per cent stake in the company. GSK stepped up its equity dividend to 400 per cent from 360 per cent last year. Aventis Pharma also maintained its equity dividend at 160 per cent. However, Abbott India slashed its equity dividend to 140 per cent from 175 per cent and Pfizer to 125 per cent from 275 per cent. Similarly, Solvay Pharma also cut its equity dividend to 175 per cent from 400 per cent and Merck to 175 per cent from 200 per cent in the last year.
The equity capital of eight MNCs reached at Rs 182.03 crore and their reserves and surplus amounted to Rs 4141.61 crore during the year ended December 2008 as compared to Rs 3524.49 crore in the previous year. Abbott India has bought back 7,97,500 fully paid-up equity shares of Rs 10 each, at a price of Rs 630 per share during 2008.
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