After grilling the Titan management over its performance, billionaire investor Rakesh Jhunjhunwala (in pic) has turned the heat on the management of another of his portfolio company, Lupin.
Jhunjhunwala, also dubbed as India’s Warren Buffet, holds 1.73 per cent stake as on March 31, 2017 worth Rs 889.18 crore in the pharma major, which reported over 13 per cent drop in its fourth quarter profit. Government of Singapore (1.67 per cent) and Abu Dhabi Investment Authority (1.05 per cent) are the other marquee investors in the company.
Markets also punished Lupin, a Sensex and Nifty constituent, as its share prices fell 7.31 per cent on BSE and 7.20 per cent on NSE.
Jhunjhunwala, while attending the earning conference call, asked Lupin management about growing consolidation on the buying side in the industry and whether it can also extend towards sell side consolidation, according to a report. Jhunjhunwala also enquired about Lupin’s strategic tie-up with a Polish biopharmaceutical company Celon Pharma.
According to a HDFC Securities performance review report, “Provision for a potential legal liability of Rs 160 crore, high forex losses of Rs 170 crore and an R&D expense of Rs 670 crore (15.8 per cent of net sales) led to a surprise sequential drop in Lupin’s EBITDA margin to 18.4 per cent in Q4FY17. As a result, net profit declined around 50 per cent y-o-y to Rs 380 crore. Revenue at Rs 4162 crore missed estimates by 8 to 9 per cent, owing to lower US sales.” Lupin’s board of directors recommended dividend at the rate of 375 per cent i.e. Rs. 7.50 per equity share of the face value of Rs 2 each for the year ended March 31, 2017, subject to approval of the members at the ensuing annual general meeting.
In the ongoing earnings season Jhunjhunwala has also locked horns with the management of Titan Industries where he holds 8.57 per cent stake worth Rs 3,533.30 crore over their watches division performance. Indigo Airlines owner Interglobe Aviation also invited his wrath on its aviation turbine fuel price estimates as the India ATF prices are still higher despite fall in global crude oil price.
Jhunjhunwala was very blunt at Titan’s earning conference call earlier this month. “Sir, I don't know how the way our profits fluctuate in the division quarter to quarter is beyond anybody's understanding,” he had said, according to the transcript of May12 earnings conference call released by the company. Jhunjhunwala also took stock of Titan’s watch and eyewear division. He asked Ronnie Talati, chief executive officer- Eyewear, “And is Ronnie also there in the call? When are we going to see double digit margins in watch -- in the eye division growth, we have invested half of four years and in 5-6 years, business should mature.”
Last year, Rakesh Jhunjhunwala had put some hard-hitting questions to Aurobindo Pharma MD N Govindarajan during the conference call after company’s June quarter results. “Taking into consideration the long-term outlook of the company, Jhunjhunwala had asked questions about new initiatives being taken by the company & why they are not yielding results or why are they not translating into revenues,” as per a report.
