JB Chemicals, one of the leading mid-size pharma companies in the country, has reported first quarter results, which show modest growth in both top line and bottom line. The company has seen growth rates slowing down from the very high rates achieved during the previous year, mostly on account of slower growth in the domestic formulations business.

For the quarter ended 30 June, 2006, JB Chemicals has reported a net profit of Rs13.01 crore - an increase of 10.11 per cent over the previous year quarter. Total revenues were higher by 8.53 per cent at Rs106.19 crore as against Rs97.84 crore for the prior year quarter.

Operating profits went up very marginally by 2.45 per cent over the previous year quarter while operating margins, excluding other income, as a percentage of net sales declined to 14.84 per cent from 15.5 per cent for the prior year quarter.

For the last financial year 2005-06, JB Chemicals had reported a 46.14 per cent rise in net profits to Rs70.93 crore on a 58.38 per cent rise in total revenues to Rs477.55 crore. With a total of eleven manufacturing units - including 3 US FDA certified units - and two R&D centres, J B Chemicals is planning to enter new segments including anti-diabetics and respiratory drugs. Among its brand portfolio metronidazole under the Metrogyl brand, ranitidine under the brand Rantac, a cardiac segment drug Nicardia, and an over the counter herbal tonic, Doktor Mom.

The company places considerable focus on overseas sales and more than half of its revenues are from exports.

Pranabh Mody, president and whole-time director, J B Chemicals, says business has grown by 20 per cent in countries like Russia and the CIS.

The company's 2004-05 export revenue of Rs211 crore constituted 57 per cent of its turnover. Mody expects the company would maintain its margins at 15 per cent and that JPCL is not looking for more funding at the moment. CNBC-TV18 shares with domain-b its exclusive interview with Mody.

What sort of growth have you got from export and domestic sales?
The export sales have been better, it's about 16 per cent and the domestic sales are a little lower, which is around 8 per cent. This is on the formulations side.

Can you just run me through your results, your topline, bottomline and your operating profit margin?
Our revenues have grown by about 7.55 per cent over the same quarter last year, it is 7.55 per cent, so it has grown from Rs98.84 crore to Rs106 crore. Profit has grown from Rs11.81 crore to Rs13.01, this is after tax, which is about a 10 per cent increase.

I believe your operating profit margins have come in at about 14.8 per cent, which is almost a little lower than your operating profit margins earlier at 15 per cent. From where has this slight hit come?
Basically, if you see our revenue, there is a lot of seasonality, which is involved in the revenue. Usually, the first quarter is lower in terms of the overall profit margin compared to the full year. However, if you look at it on a QoQ basis, the margins have moved up.

So you may expect to maintain a 15 per cent margin, going forward?
Yes, that's the target.

Your API sales are expected to take a bit of a hit due to the VAT implementation. How have you clocked on those terms?
If you look at our API sales, we have actually grown by about 60 per cent in the same quarter, compared to this last quarter. This is clearly because of the Diclofenac Sodium that we have been supplying. The demand for that is significant and we have been growing in that business.

What about your domestic sales formulation?
Our domestic formulation has grown by about 8 per cent.

Give us a word on your Russia business. How is that going along? What are the kinds of exports you are making to Russia and the Commonwealth of Independent States, CIS? Is that going to be a focus area, going forward?
It has been a focus area and it will continue to be a focus area. For the quarter that has ended, we have shown a growth of about 20 per cent as far as the Russian and CIS markets are concerned.

Could you take us through your product profile as it stands now?
I can take you through my overall sales, the way we track it internally within the system.

Give us the number of abbreviated new drug applications (ANDAs) that you have filed for and tell us the status on your product - flucon nazole?
Basically two ANDAs have been approved of ciprofloxacin and fluco nazole. Two more are in the pipeline as of date for the first quarter that has ended. There is no revenue against those ANDAs.

What about the preferential issue that you made? We understand that there is a lot of interest being generated in your company because this is a big investment that has come by. Are you being approached for more stakes?
At this time, we are not looking for more funding. At that time, things worked out good for both of us and we went ahead with the deal. But there is no real immediate requirement of funds.

How is your new specialty division - Auster performing?
Actually the whole team was in place by June 15. We will see the results of that coming from this quarter onwards.