Rupee windfall awaits Ranbaxy in Q2

The rupee’s appreciation this week has come as a welcome reprieve for Ranbaxy Laboratories, the country’s largest drug maker, which finds itself

Malvinder Mohan Singh

saddled under huge mark-to-market forex losses. Ranbaxy chairman Malvinder Mohan Singh told ET Now in an exclusive interview that the company will be able to wipe out its forex losses this quarter and head back towards profitability. Excerpts from the interview.

Ranbaxy posted losses of over $150 million in the last quarter due to the mark-to-market hit on forex derivative contracts. What will rupee appreciation mean for you?

There are two key data points. If you look at our December 2008 results, we took a mark-to-market hit when the rupee was at 48 and in the March quarter of 2009 we took a mark-to-market loss when the rupee was at 50.50 to the dollar. Today, the rupee is at sub-48 levels. If the rupee remains at this rate as we go towards end of June and finish our second quarter, we will see us being able to write back as profits all the losses we had taken in the first quarter of 2009. If the rupee remains below 48, we will also be writing back some of the losses from December 2008 in the June quarter of this year and going forward.

What is the quantum of losses that you will write back as profits in the next quarter?

We had approximately $150 million of pre-tax forex losses in the first quarter of 2009. With the rupee at 48, that is the very least we will write back though the figure could be much higher depending upon how the rupee moves.

In dollar terms, revenues have dropped nearly 31% quarter-on-quarter in the US. What steps are you taking to revive US sales growth and what is your strategy to mitigate the impact of the US FDA ban?

If you look at the US market, the impact is because of the ongoing issues with the US FDA and the fact that we are not being able to supply key products out of our Indian facilities at Paonta Sahib and Dewas. What we have been doing is trying to move some of those products into our US facilities and also other people’s facilities which are FDA approved.