Unichem Labs

Unichem Labs posted the dismal numbers it posted for Q1FY15. The company, for Q1, posted a 16% (YoY) drop in net profit at Rs.30 crore. This was on the back of lower other income despite net sales rising 10% at Rs.291 crore. This rise in sales was on account of 33% rise in export formulations through the domestic formulations showed a muted growth of just 2.5%.

EBITDA for the quarter rose 4% at Rs.44 crore though margins fell to 15%, down 130 bps. This fall in margins was on account of rise in total expenses, up 15%. This rise in expense was mainly on account of employee cost, which rose 22% and raw material expenses rose 21%. Other income for the quarter was down from Rs.8 crore to Rs.5 crore. Tax expense was down 36%.

The stock has as such been in the red, right since the European Commission imposed a fine on Unichem and Niche, jointly and severally, for acting in breach of EU Antitrust Rules, contending that it had acted in breach of EU Antitrust Rules. The European Commission reached this conclusion because its subsidiary, Niche Generics (Niche), agreed to settle financially crippling patent litigation with Laboratories Servier (Servier) at the beginning of 2005.

The company has stated that it denies any wrongdoing on the part of either itself or Niche and was not involved in the agreement to settle the litigation with Servier back in 2005 as it only took full ownership of Niche late in 2006. Thus Unichem has said that it cannot see how it can be held accountable for what was in any event a pro-competitive act on the part of its than only part-owned subsidiary Niche.