Aurobindo Pharma, one of the leading API players in the country with a consolidated net sales of Rs.3,575 crore, gained 27.6 per cent on Bombay Stock Exchange (BSE) during last three and half months and outperformed BSE Healthcare index. The Rs.5 face value share of Aurobindo closed at Rs.1,077.80 on September 17, 2010 as against Rs.844 on June 1, 2010 with market capitalization of over Rs.6,275 crore. The scrip reached at its peak level at Rs.1,109.85 on August 23 with continuous upward movements as against its yearly lowest level of Rs.672.05 on BSE. The BSE Healthcare index of 21 pharma companies improved only by 6.4 per cent during this period to 5842.24 points on September 17, 2010.

Despite poor financial performance in first quarter of current year, the scrip gained support on account of robust product portfolio, presence in over 125 countries, higher product approvals from regulatory bodies and focus on research & development. Recently, Aurobindo entered into licensing and supply agreements with AstraZeneca to supply several solid dosage and sterile products for emerging markets. It received US FDA approval for two ANDAs namely, Ampicillin injections for different ranges and with these approvals its total ANDAs approvals reached at 123.

For the first quarter ended June 2010, Aurobindo Pharma has suffered a set back in profitability mainly due to provision for foreign exchange losses. Its consolidated net sales increased by 8.2 per cent to Rs.922 crore from Rs.853 crore in the corresponding period of last year. However, its net profit declined sharply by 69.1 per cent to Rs.51.50 crore from Rs.166.57 crore. The fall in profit impacted its earnings per share which declined to Rs.9.2 from Rs.31 in the last period. The share capital also increased to Rs.28.23 crore from Rs.26.88 crore as the company issued 7,24,320 equity shares of Rs.5 each for cash at premium of Rs.517 on conversion of FCCBs. The company provided Rs.41.77 crore for foreign exchange loss as against gain of Rs.57.54 crore in the similar period of last year.

Aurobindo is implementing expansion programme to tap future opportunities. It has commissioned commercial production from Unit VII (SEZ) at Jedchehrla from June 2010 and likely to reach capacity utilisation of 50 per cent shortly. This unit is set to achieve 100 per cent capacity utilisation during 2011-12. The company also commenced commercial production from its Dayton facility in US. The investments in these projects will boost profitability in the current year.

The company's consolidated net sales for the year ended March 2010 rose by 16.2 per cent to Rs.3,575 crore from Rs.3,077 crore in the previous year. Aurobindo's consolidated formulation sales increased by 32.6 per cent to Rs.1,852 crore during 2009-10 from Rs.1,397 crore and these sales constituted almost 54 per cent of its sales. The domestic sales increased by 10.9 per cent to Rs.2,434 crore from Rs.2,194 crore. The sales in USA went up sharply by 39.4 per cent to Rs.664.85 crore from Rs.477.06 crore and the same in China went up by 29.9 per cent to Rs.22.87 crore. Its exports on FOB basis increased by 19.5 per cent to Rs.2,086 crore from Rs.1,747 crore and this worked out to 64.2 per cent of standalone net sales.

Aurobindo's product portfolio is spread over 6 major therapeutic areas encompassing antibiotics, anti-retrovirals, CVS, CNS, gastroenterologicals and anti-allergics with over 300 products. .The company has commercialized over 200 APIs. Its custom research and manufacturing division viz., Aurosource, is offering comprehensive outsourcing options with its five R&D centers.

The company's standalone R&D expenditure declined marginally to Rs.101.48 crore during the year ended March 2010 from Rs.103.23 crore and this worked out to 3.1 per cent and 3.6 per cent of its standalone turnover. The company will have to infuse more funds in R&D to achieve faster growth. The company is now entering into non-penicillin and non-cephalosporin based injectable market. Further, it is planning to enter into oral contraceptives and ophthalmic products.

The consolidated net profit of Aurobindo has taken quantum jump and touched Rs.563.08 crore during the year ended March 2010 from Rs.100.26 crore in the previous year due to exchange gain of Rs.107.26 crore. Its operating profit before interest, depreciation, taxation, foreign exchange adjustment and other adjustment went up smartly by 61.4 per cent to Rs.862.13 crore. The company shown a gain of Rs.107 crore in foreign exchange as compared to loss of Rs.250 crore in the previous year. The company also managed to reduce interest cost to Rs.67.80 crore as against Rs.83.86 crore. With strong growth in bottom line, its earnings per share also moved up to Rs.104.04 from Rs.18.65 in the last year.

Currently, promoters are holding 56.15 per cent equity capital, Foreign Institutions 22.49 per cent, Domestic institutions 11.86 per cent, general public 9.70 per cent and other bodies corporate 2.14 per cent. The company's equity capital stood at Rs.27.86 crore as at the end of March 2010 and its reserves & surplus amounted to Rs.1,801 crore as compared to Rs.1,214 crore, a smart growth of over 48 per cent. The company reduced its borrowings to Rs.2,155 crore from Rs.2,333 crore. The return on equity went up to 34.7 per cent from 8.0 per cent in the previous year. Similarly, return on capital employed was 21.2 per cent while it was 4.6 per cent in preceding year.

Aurobindo has redeemed part of FCCBs issued in 2006 and 2007. As at the end of financial year 2009-10, total 31,782 FCCBs issued in 2006 were outstanding as against 53,600 FCCBs in the last year. Similarly, 1,39,200 FCCBs issued in 2007 were outstanding. The FCCBS issued in 2006 are due for conversion into equity shares/redemption on or before May 10, 2011.

The company is managing its business operations through 13 facilities and 39 subsidiaries worldwide. Its gross fixed assets increased by 22 per cent to Rs.2,408 crore from Rs.1,974 crore. Capital work-in-progress reached at Rs.570 crore. The company acquired and amalgamated Trident Life Sciences Ltd which is setting up facility for manufacturing injectables at Medak District in Andhra Pradesh.

The company has set a sales target of US$ 2 billion within next three years. Further, it is focusing on regulated market as well as emerging markets for future growth.


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