Highlights:

• Sales up by 82% at Rs. 11586 million for FY-06 over the previous year.



• Net income up by 53% at Rs. 1992 million for FY-06 over the previous year.



• Net Sales stands at Rs. 3928 million for Q4



• Net income stands at Rs. 362 million for Q4.



• Successful completion of strategic transactions during the quarter
  1. Fine Chemical Corporation, Cape Town, South Africa
  
  
  2. Mchem Phama, China
  
  
  3. Concord Biotech, Ahmedabad
  
  
  
  
• First US ANDA Filed.

Financial Review

Matrix Laboratories Limited has reported a consolidated net profit of Rs. 1992 million on a net sales turnover of Rs. 11586 million on consolidated basis for the financial year ended 31st March 2006. Earnings per share (EPS) on the consolidated basis as on 31st March 2006 works out to Rs. 13.23 (basic) on a paid up equity capital of Rs. 307 million with a face value of Rs. 2 per share.

Matrix has posted consolidated net profit of Rs. 362 million on consolidated net sales of Rs. 3928 million for the quarter ended 31st March 2006 as compared to the net income of Rs. 286 million on sales of Rs. 1584 million in the corresponding quarter last year(previous year quarter numbers are on stand-alone basis).

This consolidated net profit after tax is after a substantial increase in Research and Development expenses to a level of Rs. 394 million as against Rs. 159 million in the previous year – an increase of 147%. The net profit is after charging an ESOP expense of Rs.57 million. Despite these charges, there has been a year on year growth of 53% in consolidated net profits for the full year.

During the year under review, the company spent a total capital expenditure of Rs.1,225 million for enhancement of capacities, upgradation of facilities etc which shall enable the company to meet the market demands in the next few years.

New initiatives

At a strategic level, the company during the last year initiated various strategic steps to meet the challenges that arose on account of the changed generic landscape and business environment. The initiatives led to the completion of:

• Front-end presence in South European market through Docpharma, Belgium



• Strengthening of supply chain through Mchem, China



• Consolidation of ARV business through alliance with Aspen, South Africa



• Access to Oncology and controlled substances portfolio through Fine Chemicals Corporation, South Africa



• Foot-hold in fermentation capabilities through Concord Biotech, Ahmedabad...

At an operational level, though partially consolidated during the year under review, these new initiatives have been EPS accretive. Going forward, these strategic initiatives will create a strong platform from where the company is appropriately positioned to meet the business challenges of tomorrow and also diffuse the risk through diversified revenue stream. Thus, the company has successfully moved from one growth driver to multiple growth drivers. In the current fiscal, the company is focusing on consolidation of all the initiatives and bring the consequent synergies as contemplated.

Generic API Business

The generic API business contributed Rs.3739 million to the net sales for the year under review. During the year, the company filed 15 DMFs in US, taking the total tally to 60. Out of these 60 products, currently only 10 products have been commercially launched.

During the current year (FY 2007), the company proposed to double this number and file 30 DMFs in the US.

ARV Business

Consolidated sales in the ARV portfolio stands at Rs. 2803 million for FY-06 which represents a growth of 74% over the previous year (Rs.1608 million in FY-05). Astrix Laboratories Limited, a joint venture with Aspen Pharmacare, South Africa, with primary focus on ARV APIs has commenced its supplies to Aspen apart from other key customers. Acquisition of Mchem has fortified the position of the company in this segment, through backward integration of key intermediates. The company expects significant growth for this portfolio in the current year.

Finished Dosage Business

During the last fiscal, Finished Dosage Facility in Nasik was upgraded to gear up for USFDA inspection and the said facility is likely to have all the regulatory approvals in the next few months. To augment the Finished Dosage business, an R & D team of approximately 80 in number was established in a short span of time and we have been successful in filing our first ANDA with the USFDA.

The company expects record filings of approximately 30 ANDAs / Dossiers in US and Europe in FY 2007.

Docpharma, NV, a 100% subsidiary of the company recorded revenue of Euro 77.8 million for the nine months ended 31st March 2006 which represents a growth of 8.5% over the previous year (Previous year Euro 71.7 million). Docpharma recorded revenues of EUR 29.1 million for the quarter ended 31 March 2006 which represents a growth of 13.7% over the previous year (Previous year EUR 25.6 million). Docpharma recorded net income of EUR 5.8 million and EUR 1.9 million for the nine months and three months ended 31st March 2006 respectively. The net income during the quarter was lower on account of higher selling & distribution expenses due to geographical expansion and development charges.

Docpharma has performed well in its core market of Belgium and Netherlands and has successfully launched its key products in Netherlands. Docpharma is now expanding its presence in Italy as further dossier approvals and consequent launches are expected in the current year.

Docpharma has also initiated the process of divestment of the hospital business division (non-core), which is expected to be completed in the next two months.

CRAM Business

Revenues out of CRAM business stands at Rs.905 million for the period ended 31st March 2006. We continued our focus on CRAM business during the year. Wide ARV portfolio and large FDA capacities will also contribute to this initiative substantially in future. The multiple projects under CRAM business initiated with leading pharma companies are expected to translate into revenues in FY-07.

Dividend

The company maintained dividend of Rs.1.20 per share (face value of Rs.2/- per share), despite the increased capital investment for future growth.

“In the financial year 2005-06, the company has completed the strategic initiatives which shall transform the company into strong player across the pharmaceutical value chain with strong global presence and diversified revenue stream. Similarly, we have also initiated further steps to improve our scale of operations and cost position. We believe that the company is correctly positioned to play an important role in the key global markets and consequently meet its medium and long-term goals” said Mr. Rajiv Malik, Chief Executive Officer, Matrix Laboratories Limited.