Pharmaceutical company Unichem Laboratories reported a 14% increase in its standalone revenues to Rs 197 crore in the December quarter, over the same period last year. Its domestic business revenues rose by 12% to Rs 155 crore while its exports business revenues rose by 24%.
Its raw material costs rose at a much faster rate however, with material consumption rising by 18% to Rs 67 crore.
Staff costs too rose by 26% to Rs 28 crore, and other expenditure by 31% to Rs 63 crore. The pharmaceutical industry is seeing the salary bill rise, due to wage inflation as also an increase in the field force. Companies are scaling up their reach, in a bid to grow their share in a fast growing domestic market.
Other expenditure would include costs such as research and development, travel, and marketing. The last two heads have been rising at a fast rate in the industry, due to expansion of reach, competition and rising fuel costs.
As a result, Unichem’s operating profit margin fell by over 6.5 percentage points to about 20% in the December quarter.
Depreciation rose by 28%, profit before tax fell by 18% while profit after tax fell by 24%. The company has commissioned new facilities in Baddi, Himachal Pradesh and in Sikkim, which has resulted in the fixed asset base rising, and affecting depreciation costs.
Unichem recently took approval from its shareholders to develop its surplus real estate. The company has land in Jogeshwari, Mumbai, where it wants to expand its own facilities as well as develop the surplus land.
Unichem’s share fell by 7.4% to Rs 208 on Friday, as investors reacted to the fall in its profit, which comes after net profit in the September quarter was flat, compared to the same period a year ago.