Wockhardt bottom-line turned to deep red during the quarter on account of Higher EO losses coupled with higher tax out go despite the robust performance on operating front. The Company consolidated net sales grew by robust 32% YoY in Q4'FY 12 to Rs 1241.39 crore. Also, on operating front margins expanded significantly by sharp 560 bps YoY to 34.6% and accordingly there was robust 58% growth in operating profit to Rs 429.28 crore. After the sharp rise in other income (193%) coupled with fall in interest cost (47%) and marginal increase in depreciation, PBT before forex gain grew by sharp 128% to Rs 358.97 crore.

However, with lower forex gain (Rs 54.78 crore vis-à-vis Rs 159.50 crore) coupled with higher EO losses (Rs 450.40 crore vis-à-vis Rs 179.42 crore), PBT posted a loss of Rs 36.65 crore (against profit of Rs 137.41 crore). Further, the higher tax provisions Rs 152.20 crore (against tax credit Rs 28.82 crore) had further widened PAT losses to Rs 188.85 crore.

For the full year, The Company improved it's performance as the net sales (on weaker base) grew by robust 23% YoY to Rs 4613.80 crore and there was sharp 279% growth in bottom-line to Rs 342.71 crore. This was due to robust performance at operating level as the margins rose by sharp 680 bps YoY to 31.2% and accordingly there was robust 57% growth in operating profit to Rs 1439.87 crore. Also, the lower interest cost coupled with marginal increase in depreciation, degrowth in EO loss despite the higher forex losses and the higher tax outgo there was robust growth in bottom-line.

Revenues from the International business grew by robust 27% for the FY'12 contributing 75% to the total sales. Notably, the growth was largely on the back of sharp 78% growth in the US business contributing 41% to the overall revenues. Importantly, it has received 9 ANDA product approvals and launched 6 products during the year. It currently markets more than 70 products and is consistently growing the market share for majority of these products in the US market. The domestic business grew by 13% primarily driven by the strong 16% growth in the branded segment during the year.

During the quarter, it has launched generic Flonase (50 mcg nasal spray of Fluticasone) in US market. The product was originally developed by the GSK and indicative for the allergic rhinitis and the total market size of this product is USD 580 million in US market. Recently, it also launched the authorized generic drug (4 out of six strengths) Stalevo with 180-day exclusivity. The total market size for this product is USD 55 million in US market.

Consolidated Quarterly Performance:

Net sales grew by robust 32% YoY to Rs 1241.39 crore for the quarter ended March 2012. Notably, margins expanded by 560 bps YoY to 34.6% on the back of fall in consumption cost (350 bps), staff cost (80 bps) and other expenses (80 bps) as percentage to sales and net of stock adjustments. Accordingly, there was robust 58% growth in operating profit to Rs 429.28 crore. Further, after the sharp 193% growth in other income to Rs 6.74 crore coupled with the 47% fall in the interest cost to Rs 48.22 crore and 6% increase in depreciation to Rs 28.83 crore, PBT before forex gain grew by sharp 128% YoY to Rs 358.97 crore.

However, after adjusting to the lower forex gain Rs 54.78 crore (as against Rs 159.50 crore), PBT before EO growth was limited to 31% YoY to Rs 413.75 crore. Further, after 151% growth in EO losses to Rs 450.40 crore, PBT posted loss of Rs 36.65 crore as against Rs 137.41 crore profit in the corresponding previous period. With Rs 152.20 crore as the provision for taxes (as against tax credit Rs 28.82 crore) and eventually it had posted Rs 188.85 crore PAT loss (against profit Rs 166.23 crore). After accounting to Rs 2.79 crore as share of loss in associates (against Rs 4.40 crore), net loss during the quarter was at Rs 191.64 crore.

Net sales grew by 23% YoY to Rs 4613.80 crore for the year ended March 2012. At operating level margins were significantly improved by 680 bps YoY to 31.2% and accordingly there was 57% growth in operating profit to Rs 1439.87 crore. After the decline interest cost by 20% to Rs 214.43 crore and marginal 5% increase in the depreciation to Rs 122.51 crore, PBT before forex gain grew by sharp 105% to Rs 1126.41 crore. Further, after adjusting to the Rs 21.48 crore forex loss, PBT before EO growth has come down to 61% YoY to Rs 1104.93 crore. However, after the 9% decline in EO loss to Rs 528.21 crore, there was sharp 453% growth in PBT to Rs 576.72 crore. But the drastic rise in effective tax rate by 3250 bps YoY to 40.8% has limited the PAT growth to Rs 341.59 crore. Further, after accounting to the Rs 1.12 crore as share of profit in associates (as against loss of Rs 5.18 crore), net profit grew by 279% YoY to Rs 342.71 crore.

Other Business Highlights:

• Wockhardt UK has grown by 13% during the year and now became the 3^rd largest generic company in the UK. Also, the Pinewood in Ireland continues to grow markets for its leading products. However, the Negma in France completed its restructuring and European business (excluding France) grew by 7% during the year.
• The Company filed 150 global patents of which 44 patents were granted during the year.
• The long-term borrowings declined to Rs 2706.39 crore as on 31^st March 2012 compared to Rs 2794.49 crore as on 31^st March 2011. Also, the Short-term borrowings declined to Rs 260.80 crore as on 31^st March 2012 compared to Rs 390.06 crore as on 31^st March 2011. Further, the cash and cash equivalents improved to Rs 699.99 crore as on 31^st March 2012 compared to Rs 482.89 crore as on 31^st March 2011.
• The Debt/Equity ratio reduced to 1.9 as on 31^st March 2012 compared to 3.6 as on 31^st March 2011.
• The Exceptional items for the year ended March 31^st 2012 mainly comprises of Rs 133.67 crore towards settlement of loan/disputed derivative liabilities, Rs 160 crore as provision for CDR recompense, Rs 333.50 crore as impairment of good will and Rs 99.74 crore as restructuring gain.

Valuation:

• The scrip was up by sharp 7.84% to Rs 717.75 at BSE, India on 22^nd May 2012 and currently trading at 12 times to the FY'12 EPS Rs 59.9.

Management Comments:

Wockhardt's Founder Chairman & Group CEO Dr. Habil Khorakiwala said, Wockhardt is back to its positive financial health. Over the past 2 years, or Debt/Equity ratio has come down from a high of 5.5 to 1.9 this financial year. Our EBITDA margins at 31% for the year and 35% for the quarter, is significantly higher than the industry average. Wockhardt has shown immense growth of 57% (Rs 1440 crore) on EBIDTA and 62% (Rs 947 crore) on PAT with out exceptional items during the year

Wockhardt - Consolidated Financial Results