Hikal's sales up two thirds on long-term contracts
Since July last year, the contract manufacturing services group has entered into active ingredient supply agreements with US firm's Alpharma and Pfizer and, more recently, the crop-science division of Germany's Bayer.
Commenting on the quarterly results, Jai Hiremath, Hikal's vice chairman and managing director, said: "The long-term contracts signed earlier with leading global life sciences companies are now resulting in increased pharma sales. We expect this trend to continue as a number of our projects will go on stream in the coming quarters."
Financials for Q1
The largest contribution to Hikal's quarterly turnover came from the firm's clients in the pharmaceutical sector. Its activities in this field, which largely consist of API supply, manufacturing and development, generated Rs 601m, up nearly 145 per cent on the equivalent period in the previous financial year.
In contrast, agrochemical and crop protection products, Hikal's other main business area, contributed around Rs 320m up only slightly on last year, despite the additional income from its Bayer contract.
However, since the end of the period, Hikal has inaugurated its new multipurpose agrochemical facility. The firm explained that the plant, which is located at the company's existing manufacturing facility at Taloja, will produce active ingredients for crop protection products, including those covered by its agreement with Bayer.
Manufacturing capacity expansion
Earlier this month, Hikal announced that the International Finance Cooperation (IFC), part of the World Bank group, is to invest $15m in the firm as part of an equity purchase.
Speaking at the time, Hiremath said that the IFC's move "clearly demonstrates the strength and potential of Hikal. Building long term strategic partnerships is the fundamental basis on which Hikal operates and we welcome IFC's financial support as part of our growth strategy."
He added that the Mumbai-headquartered group will use the funds to increase capacity and production efficiency at its existing manufacturing facilities in Jigani, Panoli and Taloja.
