Impacted by price pressure and other factors, the country's largest biotech firm, Biocon, on Wednesday reported that its net profit had plummeted 20 per cent to Rs 39 crore (Rs 390 million) for the first quarter ended June 30, 2005, over the corresponding quarter of last fiscal.
Compared to the previous quarter (January-March 2005), the Bangalore-based company said, its net profit dipped by seven per cent but sounded upbeat about prospects for the rest of the current fiscal.
"This quarter bore the brunt of capacity constraints, price erosion, depreciation in interest charges and depreciation on account of large expansion," Biocon chairman and managing director Kiran Mazumdar-Shaw told reporters.
A company statement said the decline in profit after tax was mainly attributable to higher tax charge in the current quarter due to a significant portion of export sales being routed through domestic channels and reduced treasury income of Rs 2 crore (Rs 20 million) commensurate with the deployment of IPO funds in the expansion programme.
But, Mazumdar-Shaw, considered the wealthiest woman in the country in terms of the equity she holds in Biocon, painted a rosy picture, saying, "Business prospects remain extremely positive for the rest of the year." The results should be viewed in a "longer term, not short term."
"As anticipated the pricing pressure in the European markets have affected our percentage margins this quarter," she said.
Biocon said its consolidated sales were Rs 174 crore (Rs 1.74 billion) for the quarter, which matched the sales revenues of Q1 of fiscal 2005 as well as the previous quarter.