IT raids cap series of setbacks for Aurobindo

HYDERABAD: The raids by the Income Tax (IT) Department are the latest blow to hit Hyderabadbased Aurobindo Pharma in the last year or so. Founded in 1986 by P V Ramaprasad Reddy and K Nityanan

Published: 11th February 2012 02:35 AM  |   Last Updated: 16th May 2012 05:53 PM   |  A+A-

HYDERABAD: The raids by the Income Tax (IT) Department are the latest blow to hit Hyderabadbased Aurobindo Pharma in the last year or so. Founded in 1986 by P V Ramaprasad Reddy and K Nityananda Reddy, the company has weathered a number of troughs in the past year.

First, the US Food Drug Administration (FDA) pulled up the company for violation of the Common Good Manufacturing Practices (CGMP). Next, it was the turn of the drugs controllergeneral of India (DCGI) to suspend the licence of an Aurobindo subsidiary, Axis Clinicals, for irregularities in the conduct of bioavailability and bioequvivalence studies.

The company then came under the CBI lens, allegedly for securing quid pro quo allotment of land at throwaway prices from the government of Y S Rajasekhara Reddy in return for investment in the late chief minister's son Jagan Mohan Reddy's company Jagathi Publications.

However, refuting these claims, Aurobindo chairman P V Ramaprasad Reddy then told Express that the company did not itself invest in Jagati or in any of its associate firms. "K Nityananda Reddy (MD of Aurobindo) invested Rs 7 lakh in Jagathi Publications in his personal capacity. But the company has nothing to do with that," he had said, adding, "We were alloted 75 acres in Jadcherla for an SEZ as per protocol and did not seek any favours from the then government."

Meanwhile, the euro crisis, Telangana unrest and the FDA's import alert on one of Aurobindo's manufacturing units at Chitkul, Hyderabad and the subsequent export ban on drugs produced at the unit for Pfizer Inc., dragged the company into losses for the quarter ended Sept. 2011. It made a net loss of Rs 80.1 crore as against a net profit of Rs 198.32 crore during the same period last fiscal.

Aurobindo promoters have also been pledging their stake steadily. As of Dec. 2011, they pledged 20.54 per cent, up from 14.37 per cent in Sept. 2011. They hold 54.73 per cent stake in the company, while the remaining is with mutual funds, financial institutions and the public.

Aurobindo produces active pharmaceutical ingredients, besides manufacturing cardiovascular, neurological, antiretroviral, antibiotics, gastroenterological, antidiabetic and antiallergic drugs.

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