Biocon Q1 net profit dips 71.7%

Bangalore-based drug biotech company Biocon reported a consolidated net profit of Rs 15.02 crore for the quarter ended June 30, 2008, a 71.66 per cent drop as compared to the same period in the previous year.

The company attributed the lower profits to exchange-rate fluctuations, mark-to-market provisions and absence of licensing income.

“Biocon’s first quarter performance has been unfortunately impacted by rupee volatility which has seen us make a mark-to-market provision of Rs 26 crore.

We have consciously been conservative in making this provision,” said Kiran Mazumdar Shaw, chairman and managing director, Biocon.

Mark-to-market provisions refer to the practice of revaluing securities and financial instruments using current market prices.

“I believe that our business fundamentals are robust, which is well demonstrated by the strong profit growth in our core biopharmaceutical business. The absence of licensing income this quarter has had a disproportionate impact on profitability,” Shaw said.

The consolidated total income of the company, however, rose to Rs 276.53 crore in the latest quarter, from Rs 272.21 crore a year ago period. The company also expects a higher licensing income this fiscal year.

“We are making excellent progress on the research front with several programmes approaching a licensing phase over the next two years, (that) expected to provide attractive return on investment (ROI),” Shaw said.

Biocon shares were down 6.38 per cent and closed Rs 352.20 on Thursday in the Mumbai market.