New Delhi, August 12, 2018: Net sales during the quarter fell 4.2 percent to $154.6 million compared to $161.3 million in same period last fiscal.

Taro Pharmaceutical Industries, the US subsidiary of Sun Pharma, has reported a 23.5 percent year-on-year growth in first quarter net income to $67.3 million despite weak revenue and operational performance, and higher tax cost.

The growth was largely attributed to foreign exchange gain and finance income. Profit in the year-ago period stood at $54.5 million according to the reports published in moneycontrol.com.

“We continue to face an overall market trend, particularly in the US, that is not dramatically changing, and depending on the product(s), price deflation continues to be a challenge,” Uday Baldota, Taro’s CEO said.

He further said the company continued to maintain a development pipeline investing only in those products which are viable.

Net sales during the quarter fell 4.2 percent to $154.6 million compared to $161.3 million in same period last fiscal.

“The decline in net sales was due to continuing increased competition and the challenging pricing environment; despite an overall increase in volumes of 11.1 percent,” Taro said in its statement.

Operating income also declined 18.7 percent year-on-year to $63.2 million and margin contracted by 730 basis points to 40.8 percent for the quarter ended June despite fall in R&D and SMGA (selling, marketing, general and administrative) expenses.

Research & development expenses in Q1 dropped 8.9 percent to $13.3 million and SMGA cost fell 2.7 percent to $23.6 million while tax expenses jumped 41 percent to $14.1 million YoY with the effective tax rate increasing to 17.3 percent from 15.5 percent.

The company earned foreign exchange gain of $9.96 million in Q1FY19 against expenses of $19.6 million. Interest and other financial income increased 74.3 percent to $7.8 million YoY.

Taro said as of June 2018, cash, including short-term and long-term bank deposits and marketable securities, increased $63.6 million to $1.7 billion from March 2018. “Cash reflects the $24.7 million impact from the company’s share repurchases during the current quarter.”

At 11:12 hours IST, the stock price was quoting at Rs 557.00, down Rs 13.70, or 2.40 percent on the BSE.