Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3804)	2/25/1999 4:39:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Glaxo net zooms 110% to Rs 87cr; Burroughs Welcome net up 38% to Rs 25cr Friday, February 26, 1999 Our Corporate Bureau (Indian Express) -------------------------------------------------------------------------------- Mumbai, Feb 25: Glaxo and Burroughs Wellcome India (BWI) on Thursday announced a strong topline and bottomline growth for the year ended December 31, 1998. The British multinational's showing comes even as it has yet to overcome the "last remaining hurdle"--labour woes---before moving on to an eventual merger of both companies in India. The boards of Glaxo and Burroughs Wellcome have recommended a dividend of Rs 5 per share in both companies. Glaxo India registered a 20.6 per cent increase in profit after tax (but before exceptional items) at Rs 67.12 crore, while gross sales at Rs 862.89 crore improved by 13.9 per cent (excluding the sales of the products of the Biddle Sawyer group of companies) compared with Rs 757.85 crore in the previous year. Net profits jumped by 110.3 per cent to Rs 86.63 crore, essentially due to a Rs 19.50-crore inflow following the sale of the company's Delhi branch office to the Tata-promoted Concorde Motors. Glaxo's previous year's net profits were impacted by an outgo of Rs 14.47 crore on account of payments made under Voluntary Retirement Schemes (VRS) and other retirement benefits. Glaxo also confirmed plans to co-market a cephalexin formulation with the Delhi-based Ranbaxy Laboratories and said that it had succeeded in taking a long-acting rifampicin molecule to phase one clinical trails. Glaxo India had earlier acquired the licensing rights to develop and take this molecule to the market from an Italian firm. BWI, on the other hand, recorded a 38 per cent increase in net profits at Rs 24.90 crore and an eight per cent increase in net sales at Rs 203.16 crore for the year ended December 31, 1998. Glaxo and BWI managing director HR Khusrokhan said the profit improvement in Glaxo is attributable to savings in costs of input materials through better purchasing efficiencies, improvements in manufacturing yields and other cost saving measures. "1998 also saw the benefits accruing from past voluntary separation schemes, which have now begun to pay back. Results could have been better but for an unfavourable price fixation of the bulk drug, ranitidine (prices were reduced to Rs 1203 per kg from Rs 1714 per kg) and the large burden of additional levies in the last Union budget," a press release added. Glaxo has, however, applied for a price hike on account of cost escalation in the case of ranitidine. Khusrokhan also indicated that the response to the company's offer to the 500 workers at BWI's Mulund unit had not evoked a good response. The company has offered a one-time wage adjustment compensation coupled with wages in parity with Glaxo's workforce to the BWI workers at the Mulund unit. The management has, however, considered it prudent to provide for a portion of the one-time compensation by way of a "reserve for contingency" of Rs 4 crore. On the new products slated for launch during the current year, Khusrokhan said that while lamivudine (an anti-AIDS drug) would hit the market by April, others like valicyclovir, lamotrigine for epilepsy and remifentanyl would follow suit. INSIGHT In line with expectations Glaxo and Burroughs Wellcome have produced encouraging results, the latter showing a sharp jump in operating profit margins. Burroughs Wellcome's OPM improved from 12.70 per cent to 17.19 per cent. Burrough's margin has increased on account of higher reliance on formulations. However, Glaxo's OPM fell from 11.44 per cent to 11.15 per cent. Glaxo has managed to increase its exports largely on account of higher SMX (sulphamethaxazole) and ranitidine. But for the stock market, performance of both these companies are in line with expectations. Both these stocks have started their northward journey far before the announcement of the results. While Glaxo jumped from Rs 627 to Rs 757, in the last two weeks, Burroughs Wellcome manage to show a rally upto Rs 858. Both the stocks could see some movement in the near future as the patent bill is expected to be cleared in the current budget session.