By Corporate Bureau
Japan s second biggest pharmaceutical firm, Daiichi Sankyo plans to record a valuation loss of $3.9 billion on its shares in its India-based subsidiary Ranbaxy Laboratories to reflect the decline in the market value of equities. On a non-consolidated basis, Daiichi plans to record a non-cash valuation loss of $3.9 billion on its shares in Ranbaxy in its third-quarter to reflect a more than 50% decline in market value of these securities versus the purchase price, the Japanese company said in a statement on the company s website. The company said it will suffer a one-time loss of $3.8 billion on consolidated basis for its investments in Ranbaxy. In June 2008, Daiichi acquired over 51% stake in Ranbaxy at a rate of Rs 737 per share, including the mandatory open offer to public shareholders. However, the wobbly stockmarkets ensured a free fall in the Indian company s share prices thereon. At the close of 2008, Ranbaxy s shares were trading 66% lower than the acquisition price. On Monday, the company s shares closed at Rs 249.8, down by 0.18% or Rs 0.45 on the BSE (^BSESN : 16158.28 +94.38). Daiichi sees no impact on its forecasts for non-consolidated net sales, operating income or ordinary income for the fiscal third-quarter as a result of these anticipated extraordinary losses. The company also sees no impact on cash flow. These items will have a significant negative impact on the company s consolidated financial results forecasts for net income for the nine-month period ended December 31, 2008 and for fiscal year 2008-09 ending March 31, 2009, the statement said. Some reports said Daiichi would see its first ever loss in the year ending March due to this. Reacting to the news, Daiichi shares fell 1.2% on the Tokyo Stock Exchange on Monday. Daiichi has based its estimates for the one-time write-down of goodwill on its investment in Ranbaxy to fully reflect the impact of the current unprecedented turmoil in global equities markets. The company has taken this step to meet the strictest accounting standards to ensure it remains on the firmest financial footing, it said.
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). Daiichi sees no impact on its forecasts for non-consolidated net sales, operating income or ordinary income for the fiscal third-quarter as a result of these anticipated extraordinary losses. The company also sees no impact on cash flow. These items will have a significant negative impact on the company s consolidated financial results forecasts for net income for the nine-month period ended December 31, 2008 and for fiscal year 2008-09 ending March 31, 2009, the statement said. Some reports said Daiichi would see its first ever loss in the year ending March due to this. Reacting to the news, Daiichi shares fell 1.2% on the Tokyo Stock Exchange on Monday. Daiichi has based its estimates for the one-time write-down of goodwill on its investment in Ranbaxy to fully reflect the impact of the current unprecedented turmoil in global equities markets. The company has taken this step to meet the strictest accounting standards to ensure it remains on the firmest financial footing, it said.
