Repeat Order - Hyderabad Biryani

I had written about how I dislike the managements of most Hyderabad promoted companies, recently came across one more company based out of Hyderabad which is again in trouble. This time its a pharma company, Aurobindo Phrama, the stock fell by 9% yesterday, after the company received a warning letter from the US health regulator with regards to its antibiotics manufacturing unit at Hyderabad.

The company had on 23rd February 2011, submitted to the exchanges, a press release stating that Unit IV of the company has been put on an import ban by the USFDA and it will impact the shipments from unit IV to US markets. On this announcement, the company stock fell by 7.8% on Feb 23, 17% on Feb 24 to hit 170.

Yesterday in continuation with the same, the company has received a warning letter from the agency, and in addition based on the field alert report for packaging and labeling compliance for unit III, the USFDA has also asked for submission of a detailed action plan for improvement. The stock fell 9% and today as i write it is down another 5% to 167. So the intermediate action where the stock rose was just in anticipation that the meeting between the company officials and the USFDA will lead to a positive development. The price is back to the same place as on Feb 24.

There is something in Hyderabad that works against the investors. Its like the Bermuda triangle, you are bound to be in trouble if you fly in that part of the North Atlantic Ocean.