Knoll Pharma chairman MP Wakeford told shareholders at the annual general meeting here on Wednesday that the company has a current cash surplus in excess of Rs 100 crore invested in mutual funds, intercorporate deposits and bank deposits. ``The yields on these investments are lower than desired. The management has plans to invest these funds in the acquisition of brands.

However, good quality brands are scarce and many times expectations of price by the potential sellers are unrealistic,'' he said. Wakeford also heads BASF Pharma's International operations for Africa, Australasia and Japan as well as corporate marketing for Knoll AG.

Wakeford said that the reduction in prices of Brufen and Entamizole by the government had hurt the profitability of the company. Thecompany is expected to be affected to the extent of around Rs 4.80 crore due these price cuts. It will also be hit by the 35 per cent reduction in the prices of the B-Complex capsules. Knoll's Betonin capsules will be affected and the reduction is expected to make a further dent in the company's profitability during the current year.

Besides, the steep reduction in the price of Ranitidine and Ibuprofen had also compelled the company to discontinue the marketing of Advene (Ranitidine) and Febrilix (Ibuprofen) from April 1998, he said. On whether the parent company planned to increase its stake in the Indian arm to 74 per cent, Knoll president and managing director DM Gavaskar said a decision would be taken at an appropriate time in consultation with the chairman. Wakeford had earlier indicated that such a decision was also based on the ``demand-supply'' situation.

On shareholder queries on ``renegotiation'' of the terms of the deal for the assignment of the Sion property to Neo-Pharma, Gavaskar said thatthe options were either to file a suit or reschedule payments and benefit in the long term. ``Pending assignment, an amount of Rs 26 crore has already been received from Neo-Pharma and a decision will be taken in the next month or so,'' he added.

The company has also launched Ulcikit in the antipeptic ulcerant market; Cremalax, a new generation laxative; Obimet, an oral hypoglycaemic agent for obese diabetic, among others.

Three-way pact with Torrent, Novo Nordisk
Knoll Pharma has entered into a three-way pact with the Gujarat-based Torrent Pharmaceuticals and Danish giant, Novo Nordisk, in the anti-diabetes (human insulin) segment. Under the arrangement Torrent manufactures these products for Novo Nordisk, while Knoll markets these formulations.

In the bovine insulin category, MJ Pharmaceuticals (now part of the Sun Pharmaceuticals group) undertakes production on a loan licence basis. For the year ended December 31, 1998 loan licence manufacturing charges incurred by Knoll were roughly Rs1.44 crore.

Net profit up to Rs 7.06 cr; sales jump 18.3%
Knoll Pharmaceuticals has registered a net profit of Rs 7.06 crore for the quarter ended March 1999 as against a loss of Rs 5.34 crore in the corresponding quarter of the previous year.

The sharp turnaround is essentially due to the presence of extraordinary items in the quarter ended March 1998. Extraordinary items for that quarter and the year ended December 1998 represent a consideration aggregating Rs 10.20 crore paid for the acquisition of marketing knowhow, technical knowhow and trade mark for formulations of Epilex (acquired from Reckitt & Colman) and on account of expenditure under a voluntary retirement scheme amounting to Rs 3.19 crore. Sales for the quarter increased by 18.3 per cent to Rs 61.22 crore (Rs 51.77 crore). Other income and total expenditure stood at Rs 2.59 crore and Rs 54.09 crore. Depreciation and provision for taxation were lower at Rs 1.16 crore and Rs 1.35 crore respectively.