Granules India warns on guidance after Q2 net slumps

Drugmaker Granules India on Friday warned volatility and uncertainty over raw material supplies and prices would undermine its guidance for the fiscal.

“Due to the current volatile and uncertain environment, we believe that we will not be able to meet our guidance. It will not be prudent on our part to give any future guidance until the situation becomes stable,” Chairman and Managing Director Krishna Prasad Chigurupati said in a release on the September quarter results.

Consolidated net profit for the quarter declined 51% to ₹81 crore from the ₹164 crore of the year earlier period. The drop in net profit came as income from operations rose 4% to ₹888 crore (₹858 crore).

Business during the quarter was impacted due to difficulties in procuring raw materials, mainly from China. Increase in procurement prices for almost all items due to interruptions in supply of materials as well as higher logistics costs triggered by vessel shortage and port congestion in various parts of the world were other factors, the company said.

Gross margin dropped to 50.9% (57.9%). The decline was on account of reduction in margins of all major products, especially Paracetamol as raw material prices and logistics cost increased. Price pressure in USA also resulted in marginal drop in gross margin for core products.

Mr.Chigurupati said the company has been taking necessary measures to de-risk itself from supply chain disruptions and expects to see the efforts bear fruits next fiscal onwards. “All our projects and plans are on track, and I am very confident that the current fiscal will be a one off and not affect our long-term growth strategy and aspirations,” he said.