Claris Lifescience

Claris Lifesciences tumbled down badly on Friday, was deep in the red. The stock was hurt because the company has come under the National Pharmaceutical Pricing Authority (NPPA) scanner for overcharging prices of medicines. It has been found to be selling drugs at prices much higher than the ceiling fixed by NPPA and NPPA has now raised a demand for Ra.130 crore from Claris and another company, Inatas.  Claris already has another case pending in the Gujarat High Court where the company has challenged the NPPA's claim of overcharging. So does this mean that the company is a habitual overcharger?

Financially, the company did not have a good Q2FY13, with topline falling 5% (YoY) at Rs.194 crore and net profit was down 26% at Rs.25 crore. The company, when it had come out with its IPO in Nov 2010, had met with a very poor response. So much so that at end of last day, it had just 44% subscription and the IPO closing was extended by four days and the price band was also lowered by 20% from a price band of Rs.278 to 293 to Rs.228-235/share. At the time of the IPO itself, the company had major corporate governance issues and this swooping down of NPPA thus does not come as a surprise. Promoters’ stake has been coming down – from 69% in March 2012 to 67.28% in June 2012 and now at end of Sept 2012, it stands at Rs.62.06%.