Alembic Pharma is not doing too well today; from its close of yesterday at Rs.503.20, the stock sunk almost 5.5% to hit a new 52-week low at Rs.476.30.

The company announced yesterday night that it will be taking an impairment charge of Rs 1,150.43 crore pertaining to its three under-construction manufacturing plants in Gujarat.

The company has 3 new manufacturing facilities that were under construction and one formulation unit. Covid and then US FDA approval processes delayed the projects, while there was price erosion in US generics market and increasing market interest rates domestically and globally; all these significantly impacted the estimates of cash generation and is likely to have undergone a significant downward revision. The company said that due to these the carrying amount of the Capital Work In Progress (CWIP) of these manufacturing Facilities is higher than the recoverable amount.

The impairment is over and above the write-offs of Rs 340 crore so far due to the buyout of its partner stake Aleor Derma in March last year. The total write-offs currently stand at Rs 1,490 crore.

The company said that an amount of Rs.1,894 crore, standing to the credit of the General Reserve, shall be utilized in order to maintain the accumulated unconditional distributable profits that existed before giving effect of write-off / impairment of Identified CWIP.

There is no outflow of cash from the company on account of the Scheme.