Production pause, price erosion, lower demand impact Granules Q2 net 


Generic drugmaker Granules India consolidated net profit declined 5% year on year to ₹97.23 crore for the September quarter and 28% sequentially on the impact of a voluntary pause in operations at a manufacturing facility as well as price erosion and lower demand in a key business segment.

The company had reported ₹102.1 crore net profit in the year earlier period and ₹134.6 crore for the previous, June quarter. The net profit came on a 19% decline in revenue from operations, during the second quarter, to ₹966.6 crore (₹1,189.4 crore). Sequentially, the decline was 18% from Rs.1,179.8 crore in the first quarter of this fiscal.

“Q2 sales were impacted by a voluntary pause in manufacturing and distribution from our Gagillapur facility [in Hyderabad]. We delivered strong margins, supported by profitable formulations sales and a favourable product mix,” Chairman and Managing Director Krishna Prasad Chigurupati said in a release.

The company had paused production, at the plant, to reassess the potential risk on account of the US Food and Drug Administration observations and resumed operations in a staggered manner in October. The U.S. FDA had from August 26 to September 6 inspected the facility and issued six observations.

Continued demand issues in active pharmaceuticals ingredients and pharmaceutical formulation intermediates (API/PFI) driven by high customer inventory and price erosion in the market also had a bearing on the September quarter financial performance for the company. The revenue share from the North America increased to 79% compared to 67% in the year earlier period.



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