Shasun Pharma eyes robust Q4 growth, says MD

We are committed to get numbers of Rs 145 crore of EBITDA for the whole year

S Abhaya Kumar

MD

Shasun Pharma

Shasun Pharmaceuticals reported a fall in consolidated net profit of nearly 67 percent year-on-year to Rs 8.2 crore in the third quarter of FY13. The company's consolidated net sales too came in weak, slipping 13 percent to Rs 257.1 crore from Rs 295.8 crore during the same period.

Abhaya Kumar, MD of Shasun Pharmaceuticals  said the Q3 margins were stressed owing to price pressures from the US. Besides, they also had to cut prices in one of the API supplies to US which added to their woes. Going forward, he expects to post robust growth in Q4 and is looking to get numbers of Rs 145 crore of EBITDA for the entire year.

Here is the edited transcript of the interview on CNBC-TV18.

Q: The market does not like your numbers because your EBITDA has halved year on year and has fallen by a third even quarter on quarter. What went wrong in the current quarter?

A: If you look at the year to date number, the total revenue has improved by 6.3 percent and EBITDA levels have definitely been a little higher than last year. This quarter there has been a shortfall and off take of one of the products of active pharmaceutical ingredient (API) and the margins were also under pressure. That is why you see a little reduced revenue growth and pressure on the margins.

Otherwise, year to date, we are doing well and we are committed to get numbers of Rs 145 crore of EBITDA for the whole year.

Q: What led to the margin pressure in the current quarter?

A: One of the APIs which we are exporting to the US had price pressure and we had to reduce the price to keep the market up. But, the quantities did not move to the extent that we had expected. However, all those corrections have been done now and we expect a robust Q4 that will take us to the same levels of last year or little higher than the last year.

Q: In the UK market too there are reports that because of regulatory issues you might be facing loss of business from one client. Is that true?

A: There are no such regulatory issues in our UK plant at all. One of the customers had a regulatory warning but that has got nothing to do with our performance in UK. If you look at our UK performance it has been good and we have maintained the profitability there.

Q: But your contract manufacturing and research services (CRAMS) business in the UK is down 24 percent year on year?

A: Year on year it is not 24 percent down but instead of 42 million pounds this year we will be doing around 37.6 million pounds. So you see a 10 percent degrowth in UK but the EBITDA margins have been little better.

Q: So why is the fall happening in the CRAMS business in UK?

A: Customers move their market or offtakes according to the market condition but there is always a challenge to get new customers. In fact, in UK the new customer growth we have has been phenomenal compared to so many previous years.

We have secured a major contract in 2013-14 for 5.3 million pounds. There are exciting phase three opportunities and we have got 12 new products to our UK pipeline. We also have several other key products in our pipeline. So Shasun Pharma Solutions Limited (SPSL) UK as such is going to continue to maintain profits and continue to perform better year on year than what it is doing right now.

With the order received for one of the key intermediate for phase III molecule, which is for Alzheimer's disease, we see a huge growth in the coming years in SPSL UK.

Q: So you expect Q4 to be much better than Q3?

A: Definitely, because Q4 performance has always been better.