Jubilant Life Sciences, the largest custom research and manufacturing services player in India, has seen its stock price halve over the year. The BSE Health Care Index, in contrast has gained by over 14 per cent in the same period.

Hamstrung by lower than expected take-off in orders from global pharma after the massive destocking in 2008, CRAMS companies including Jubilant have had a tough time improving their financial scorecard. For the nine-months ended December 2010, Jubilant's net sales grew by a meagre two per cent only. Deteriorating margins, led by lower proportion of high-margin services, rupee appreciation and pricing pressure (due to high competition) too played spoilsport. Its operating margins during the period slipped from 23.8 per cent to 16.9 per cent. As a result, profits slipped by over 40 per cent to Rs 168 crore.

Concerns over the company's impending FCCB conversion of about $202 million (due in May) too may have weighed on it. While it has arranged for US dollar denominated ECB to meet the redemption, it will result in higher interest costs for the company. The management expects better business environment from this year onwards. New order flows, increased capacity utilisation and regular isotope supplies will hold the key. The demerging of its non-core agri and polymer business into a separate company last year too may help.

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