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Shishir Asthana
On the face of it, Unichem Laboratories results look very impressive. It has recorded a 21.29 per cent growth in turnover from Rs 76.46 crore in the first half of 1997-98 to Rs 92.74 crore in the first half of the current fiscal. The company's bottomline has shown a whopping 340 per cent jump and has touched a figure of Rs 6.42 crore from its earlier figure of Rs 1.46 crore. However, growth in profit before tax is only 15.7 per cent having shown a jump from Rs 7.93 crore to Rs 9.18 crore during the same period under consideration. The drastic jump in the bottomline has been on account of a provision of Rs 5.56 crore in first half of 1997-98 under the voluntary retirement scheme as compared to Rs 1.21 crore in the current year. Slower growth rate at the PBT level is inspite of the fact that the company's operating margin improved slightly from 14.37 per cent to 14.48 per cent and other income has increased from Rs 1.41 crore to Rs 1.80 crore.
The main hit to the company was on account of higher interest costof Rs 3.64 crore as compared to Rs 2.43 crore in the previous year. Further depreciation was also slightly higher at Rs 2.41 crore as compared to Rs 2.04 crore in the previous year. Higher depreciation and interest cost was due to the company commissioning its new formulation unit in Goa.
Unichem Lab has undergone some major restructuring over the last couple of years. A VRS package which resulted in 352 employees and workers opting for it, was announced for its plant in Jogeshwari, Mumbai. This unit was supposed to be unviable considering the high operating cost in the city. Further, Unisearch Ltd and Unichem Ltd were amalgamated with Unichem Laboratories in 1996-97. The company then went for expansion by announcing setting up of plants in Bardez, Goa (formulations) and Baddi, Himachal Pradesh (antibiotics).
As a result of amalgamtion, the company's ORG ranking jumped up from 28th to 20th. Unichem Lab, with presence in gastroentrology, surgery, psychiatry, cardiology, neurology, antibiotics,antihypertensives has five brands in the top 250 brands in the industry. Importantly, the company has a wide marketing network which penetrates 90 per cent of the country's market and has over 80,000 retail outlet. Further, the company has presence in over 25 countries worldwide. The company also has bulk drug and intermediates manufacturing facilities, which contribute around 12 per cent of the turnover.
The effect of restructuring has just started to show on the company's financials. With lower cost manufacturing facilities, expansion plans and and a deep market penetration the company is all set for better growth rates in future. With provision for VRS being written off completely in this fiscal bottomline of the company should show an appreciable jump in future.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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