Wockhardt Ltd, a pharma and biotechnology major from Mumbai, has suffered heavy setback during the first quarter ended March 2008 mainly on account of sharp rise in employees cost, heavy interest burden and accounting for derivatives. As per the National Stock Exchange figures, the consolidated net profit declined by 23.2 per cent to Rs 50.90 crore from Rs 66.30 crore in the corresponding period of last year. The consolidated net sales went up by 50.3 per cent to Rs 785.70 crore during the first quarter from Rs 522.80 crore.

The acquisition of Negma Laboratories in France and Morton Grove Pharmaceuticals in the US has shown a remarkable performance and this has enabled us to increase our operating profit by 50 per cent and maintain a margin of 22 per cent," said, Habil Khorakiwala, chairman. The operating profit before interest, depreciation, taxation and extra-ordinary items went up by 50.9 per cent to Rs 178.2 crore from Rs 118.1 crore in the corresponding period of last year.

The company's employees cost increased to Rs 154.50 crore during the first quarter ended March 2008 from Rs 81.10 crore and its interest cost went up to Rs 56.50 crore from Rs 12.90 crore in the corresponding period of last year.

Besides, the company has accounted negative Mark-to-Market (MTM) losses aggregating Rs 27.90 crore during the current quarter. Wockhardt has entered into Hedging Instruments, which are long term in nature to reduce interest cost for the loans, which the company has taken in past and is outstanding as of march 31, 2008. As per the risk management policy, the company is hedging the interest for 50 per cent of the long term loans.

Europe continues to be Wockhardt's single largest market accounting for 54 per cent of consolidated sales. The business grew at 69 per cent, driven largely by a surge in the European formulation business growing at 70 per cent and the opportunities of contract manufacturing fructifying and gaining momentum for the future. Overall, the US business grew by 141 per cent. Sales of Morton Grove Pharmaceuticals are as per plans and the business is getting integrated and optimised for the future. There were 5 ANDA approvals during this period. Currently, Wockhardt markets 58 products in the US market.

The company's standalone net sales for the first quarter increased by 12.6 per cent to Rs 329.70 crore from Rs 292.70 crore in the corresponding period of last year. However, its standalone net profit declined by 45 per cent to Rs 0.70 crore from Rs 52.0 crore.