GlaxoSmithKline Pharmaceuticals on Friday announced a sharp fall in its net profit from a high of Rs 161.2 crore in the quarter ended March 2010 to Rs 0.5 crore in the quarter ended March 2011 as it had to make an exceptional provision of Rs 185.9 crore on account of a litigation with the government on pricing of bulk drugs.
While the net profit before exceptional item for the company stood at Rs 186.3 crore, an interest demand of Rs 246.8 crore on a liability of Rs 71.8 crore in 1990, ate into the operating profits.
The demand was on account of Betamethasone bulk drugs and formulations made between May 1981 and August 1987, which has been under litigation.
"The government has vided letter dated May 4, 2011, called upon the company to discharge the entire liability including up to date interest calculated at 15% p.a. The company will take such further steps as it may be legally advised in relation to the demand for interest. In the meanwhile, without prejudice to its position that interest is not payable, the company has recognised a provision of Rs 246.8 crore in respect of the government's claim for interest disclosed in exceptional items," said the company statement.