FOR the first time in its history, Mumbai-based pharma major Wockhardt slipped into the red because of huge mark-to-market losses on account of the steep devaluation of the rupee but said it is taking steps to contain the MTM losses in the current financial year.
The company, which was founded by its chairman Habil Khorakiwala in the early 1960s, suffered a net loss of Rs 139 crore in 2008 due to MTM loss of Rs 581 crore even after net sales grew by 35% to Rs 3,593 crore. Operating profit (EBITA) was up 26.5% to Rs 808 crore. In 2007, the company posted a net profit of Rs 386 crore on net sales of Rs 2653 crore.
The companyâ€™s loss for 2008 â€” its financial year coincides with calendar yearâ€” would have been higher had it provided for the entire MTM loss. Wockhardt has not provided for MTM loss of Rs 489.52 crore that some banks claimed after cancelling forex contracts. The company said that it has obtained legal advice that the cancellation of contracts can be disputed. The company also announced that it would seek shareholder approval for the sale of its animal healthcare business either to its subsidiary or any interested party.
Mr Khorakiwala said in a media release: â€œDue to the meltdown in the global market and the consequent currency volatility, we had to make provisions for mark-to-market losses, which has a marked impact on our bottomline.â€ The companyâ€™s borrowings in foreign currency to finance its aggressive acquisitions and the subsequent depreciation of the rupee were responsible for the MTM loss. A mid-sized pharmaceutical firm till the late 1990s, Wockhardt grew rapidly through organic and inorganic measures, a niche product portfolio and a potential value unlocking from its R&D. It raised $450 million through ECB and $140 million through FCCB to fund its series of acquisitions in the past two years including Pinewood Laboratories in Ireland, Negma Laboratories in France and Morton Grove Pharmaceuticals in the US. The MTM loss for the December 08 quarter and Marchâ€™09 period was Rs 554 crore and Rs 32 crore, respectively. So, it suffered a net loss of Rs 358 crore for the Decemberâ€™08 quarter and Rs 20 crore in Marchâ€™09 quarter. Wockhardt failed to furnish the audited financial results for year ended December 31, 2008 on March 31 as the statutory audit could not be completed because of the restructuring of certain businesses.
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