This story first appeared in DNA Money edition on Friday, May 3, 2013.
GlaxoSmithKline Consumer Healthcare is significantly stepping up its capex as it plans to spend this fiscal the combined amount it spent in the last three years.
“Money will be spent on balancing equipment at some our factories at Nabha, Rajahmundry and Sonepat, thereby increasing throughput there. Then we have various cost engineering projects in addition to acquiring office space to house new employees,” Ramakrishnan Subramanian, director-finance, said on an earnings call.
For the first quarter of this fiscal, GSK reported a 20% year-on-year increase in net profit at Rs 156.41 crore, while sales rose 16% to 975.38 crore. GSK in the last three years spent around Rs 250 crore towards capex, including for a plant in Sonepat, Haryana.
“This year again we have a Rs 250 crore plan because of a lot of other things, including the office which is a huge expenditure for the company,” said another official.
The company would add more outlets to its distribution reach of 8 lakh outlets this year and focus on rural markets. “Our intention is to reach 50,000 villages by 2016,” said Subramanian.
With competition getting aggressive and doling out heavy discounts, GSK has adopted a different approach to tackle the situation. “We are focusing more on brand building activities coupled with introduction of premium products,” said Subramanian.
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