Cipla declared a 21% growth in revenues for the first five months ended Augustí01 at its AGM held on 4th September'01. Considering 1QFY02 figures, where revenues grew by 20% (gross), the first five months numbers reflect a better performance in two months viz July & Augustí01, especially when the industry as a whole is showing a decelerating growth. Few more details of the AGM as under.
Contingent liabilities, not a cause of concern now
In a major development, the division bench of the Mumbai High court held that seven important bulk drugs (viz. Ciprofloxacin, norfloxacin, salbutamol, theophylline, cloxacillin, doxycycline, and glipizide) do not fall under the purview of the price control and that the DPCO is not applicable to them. This court case pertained to the governmentís view that Cipla (and other companies) had charged higher prices for 8 drugs, which were under the price control. However, the company had contended that the same were not liable to be included within the ambit of price control parameters laid down by the Drug policy. The total amount in question was to the tune of Rs 2.1 bn and the company had not created any provision for the same in its books. The court ruling in favour of the company came as a major relief to the shareholders as these contingent liabilities are unlikely to be a cause of concern for Cipla now.
The company reiterated that it working on few molecules for NDDS (New Drug Delivery System). Besides, the company is also working on NCE (New chemical Entity). Cipla allocates around 4% of its sales revenue for its R&D programmes.
Foray into Biotech & Genetic Engineering
The Company informed that it is interested in to venturing into biotech and Genetic engineering with a suitable foreign partner. Cipla is evaluating options for such possible tie-ups.
First Five-month results
The sales for the first five months for the period ended Augustí01 has shown an overall increase of over 21% (gross) compared to the previous year. Exports have grown 75% in the five months period.
We maintain our 32% revenue growth estimate for FY02 on the back of expected spurt in generic exports. Exports are expected to leapfrog in the second half of the current year as the company starts exports of Omeprazole and CFC inhalers to the European markets.
At the current market price of Rs 1,231, the stock trades at 28x our expected earnings for FY02.
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