• Divi’s Laboratories (Divis) at Vishakhapatnam (which is under import alert 66-40) Unit-2 was re-inspected by the USFDA between 11-19th September 2017. As per the management clarification, all observations have been completely resolved. However, on completion of inspection, Divis received a Form 483 citing six observations (procedural in nature), which the company shall respond to, in the stipulated time period.

Impact: As per the management clarification, the six observations cited in form 483 are all procedural in nature and non-repetitive. Hence resolution in the stipulated time frame is manageable. The next logical step will be lifting of Import Alert letter 66-40, which we expect should be lifted around Nov/Dec 2017(post resolution and closure of all observations satisfactorily). We thus expect the business to resume normalcy from FY2019. Hence we have revised our sales and earnings estimates upwards for FY2019 by 5% and 19% respectively. We introduce estimates for FY2020.