Sun Pharma Sees Profit Hit in FY16 on Ranbaxy Costs

Published: 21st July 2015 04:59 AM  |   Last Updated: 21st July 2015 04:59 AM   |  A+A-

HYDERABAD:The country’s largest drug maker Sun Pharmaceutical Industries Limited is likely to take a hit in its profit for the current fiscal due to costs related to the ongoing integration with Ranbaxy Laboratories.

As a part of the integration process with Ranbaxy, the company expects to incur certain integration charges in order to generate long-term synergies from this merger, Sun Pharma said in a statement on Monday.

As per the company’s estimates, the consolidated revenue would remain flat or show a decline over FY15. Also the consolidated profit ‘may also be adversely impacted due to certain expenses/charges arising out of integration as well as remedial actions’.

The company, which completed the $4 billion merger deal with Ranbaxy Laboratories in March this year, however expects that the integration initiatives like strengthening and building of leadership position in key markets and business segments, will help the company revert to a more sustainable growth trajectory post FY16.

Also as part of the integration processes, the company may decide to discontinue certain non-strategic businesses, it added. The company also expects synergy benefits from the Ranbaxy acquisition to increase by up to 20 per cent by 2018.

“Post this consolidation, we believe that the company will be better placed to pursue higher than industry growth in subsequent years,” the company said. “Our target for the synergy benefits from the Ranbaxy acquisition has increased by 15-20 per cent as compared to our original target of $250 million by FY18,” it said.

For the year ended March 31, the company posted a net profit of Rs 4,540.60 crore, while the same stood at Rs 3,141.47 crore in the previous year. Net sales of the company stood at Rs 27,286.50 crore for the entire fiscal. The same stood at Rs 16,004.39 crore in 2013-14.

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