Daiichi Sankyo Company, Japan has announced that it has decided to write-down a valuation loss on its investments in Ranbaxy Laboratories for Q3 to the tune of US$3.98 billion (359.5 billion Yen). This worked out to a more than 50 per cent decline in the market value of these securities versus the purchase price. Currently, Ranbaxy scrip is moving around Rs 250 on Bombay Stock Exchange as against Daiichi's purchased price of Rs 737.

These one time provisions will have a significant negative impact on the company's consolidated financial results forecasts for net income for the nine months ended December 2008 and for the year ending March 31, 2009.

However, Daiichi has stated that there will be no impact on its forecasts for non-consolidated net sales, operating income or ordinary income for the fiscal third-quarter as a result of these anticipated extraordinary losses. The company also sees no impact on cash flow.

Daiichi has based its estimates for the one-time write-down of goodwill on its investment to fully reflect the impact of the current unprecedented turmoil in global equities markets. The company has taken this step to meet the strictest accounting standards to ensure it remains on the firmest financial footing.

The company and Ranbaxy initiated full-ledged cooperation following the appointment on December 19, 2008 of a new Board of Directors at Ranbaxy that includes Daiichi Sankyo CEO Takshi Shoda and senior executive officer Tsutomu Une.