Since the time the Zydus Cadila Group assumed effective control of the management of German Remedies Ltd (GRL) in September 2001, the company has recorded improved performance and reversed the trend of declining sales and profitability, the company chairman Pankaj R Patel said during the 52nd Annual General Meeting of the company in Mumbai yesterday.

"I have pleasure in informing you that under the new management, a series of steps have been initiated to improve growth and profitability of the company. These include, inter alia, new product launch, rationalization of facilities as well as synergies with the Zydus Cadila group to realize cost savings," he said.

Around 50 shareholders attended the meeting held at the Y B Chavan centre opposite the state secretariat, a company source said here today.

Consequent to the sale of shares by Degussa Group companies and shares purchased in open offers, Recon Healthcare Limited, the wholly owned subsidiary of Cadila Healthcare Limited alongwith Cadila Healthcare Limited, has acquired around 77.37 per cent of the equity share capital of GRL.

The Indian pharma industry continues to undergo structural changes to gear up for the challenges of the post-2005 era, where new product introductions will be mainly research driven, he said.

The Patents (Second Amendment) Bill, 2002 received the President''s assent and the new Pharmaceutical Policy was announced in the first week of February. In this backdrop coupled with still slow growth of domestic pharma industry, the year 2001-02 was a challenging year for the company.

For the year 2001-02, the company''s sales and income from operations marginally decreased by 2.8% to Rs. 226.66 crores. The decline in income from operations to the extent of about Rs. 6 crores was mainly due to the agreement for the Agiolax plant, which stipulated progressively reducing rates of recovery. However, it is encouraging to note that the company''s sales performance reflected around 5 per cent growth in the second half of the financial year, he said.

The Directors have proposed a dividend of 80 per cent for the year ended 31st March 2002.

During the first quarter of the current financial year, the sales and income from operation were Rs. 56.18 crore, up 15 per cent as compared to Rs, 48.83 crore during the corresponding quarter in the previous year. The profit before tax was also up by 15 per cent to Rs. 6.43 crore, as against Rs. 5.57 crore for the first quarter last year, in spite of the income from operations of the Agiolax Plant being lower by Rs. 0.76 crore.

Patel said the growth was due to three main reasons: greater thrust in sales performance and new product introductions; launch of a new specialty division "Respicare" focusing on specialised respiratory products; and launch of new products in the other high growth segments such as female healthcare, oncology, gastrointestinals.

During the year under review, the company''s wholly owned subsidiary German Remedies Specialities Limited (GRSL), formerly known as GR Exports Limited, recorded exports of Rs. 5.57 crore.

With effect from April 1, 2002, the company proposed to carry on export business itself instead of through GRSL. GRSL will now be concentrating on promotion of specialty products of the Respicare division, he informed.

As a part of rationalization of manufacturing facilities and to synergise the manufacturing activities of Zydus Cadila and GRL, the company has offered voluntary retirement scheme to its employees at the Andheri factory from September 2002.

The manufacturing operations at the factory is planned to be closed with effect from October 1, 2002. The objectives of this restructuring are to improve capacity utilization, productivity and reduce the cost of production. The products manufactured at the Andheri plant are expected to be mainly transferred to GRL''s Goa plant and the Ahmedabad plant of Zydus Cadila. Hence, the closure is not expected to affect the sales turnover of the company, he assured investors.