According to market sources, Knoll Pharma plans to reward its shareholders as the company posted a 143 per cent jump in net profit for fiscal 1996-97. The company ended fiscal 1997 with a net profit of Rs 49.95 crore compared with Rs 20.43 crore last year. However, this unusual growth in net profit is largely due to an extraordinary income component of Rs 24.48 crore arising out of the sale of its OTC brands - Burnol and Coldarin - to the joint venture with Nicholas Piramal. In other words, the company issharing the selloff booty with shareholders in kind. Knoll Pharma, thus, joins the select band of companies who have doled out hefty dividends or issued bonus shares after hiving off or selling their units/brands. The most recent case was Lakme Ltd whose largesse included a 600 per cent dividend after it sold off the "Lakme" brand and manufacturing facilities to Lever. Glaxo and Dr Beck also rewarded their shareholders with dividends of over 100 per cent.

If approved by the board of directors of Knoll Pharma, the bonus will come after a 10 year-gap -- the last time the company issued a bonus in 1988 at the ratio of 1:1. At present, Knoll Pharma has a paid-up capital of Rs 8.1 crore, while reserves stand at a comfortable Rs 51.74 crore. For the shareholders, the bonus will be an added bonanza after the 80 per cent dividend announced last month.

If one excludes the extraordinary income of Rs 24.48 crore, Knoll Pharma's performance during 1996-97 would have been lacklustre. Sales have grown by only 4.4 percent to Rs 243.84 crore and company sources attribute this to a general slowdown in the domestic pharmaceutical industry. Similarly, net profit would have grown by only 20 per cent to Rs 25.47 crore. The only saving grace is that operating margins have improved from 12.7 per cent to 15.8 per cent due to the cost-cutting measures undertaken in the past three years. Besides, interest outflow has also come down from Rs 3.49 crore to Rs 47 lakh.