Shares of Alembic Pharmaceuticals hit a 52-week low of Rs 476.30 after the company said its board approved an impairment charge of Rs 1,150 crore at three plants in Gujarat, falling 5% on the BSE in intraday trade on Friday. The drugmaker’s shares fell below its previous 52-week low of Rs 490.35 on February 15, 2023.

Alembic Pharma has conducted an impairment review of capital work in progress (CWIP) assets at three new facilities in Gujarat, namely Facility 2 (for oncology injectables and Oral solid dosage form). As of January 1, 2023, the impairment amount is Rs 1,150 crore.

The same should be written off in the income statement for the 2022-23 financial year, and the general reserve will be used to maintain accumulated total distributable profits.

Alembic Pharma said that due to the Covid-19 pandemic, the US Food and Drug Administration (USFDA) approval process for these manufacturing facilities had taken much longer than normally expected.

In addition, management believes cash generation estimates for these manufacturing facilities have been materially impacted and may have been revised significantly in light of the recent price declines in the US generic drug market and rising interest rates in domestic and global markets.

The company believes that these reserves may be used to create additional shareholder value in a manner and to the extent determined by the Company’s Board of Directors from time to time by Alembic Pharma, the Act and other applicable laws.

At 10:05 am, the stock erased most of its intraday losses to trade down less than 1% at Rs 499.15 on the BSE. In contrast, the S&P BSE Sensex gained 0.91% to 59,445.

Alembic Pharma, meanwhile, has underperformed the market over the past year, falling 32%, while Sensex has gained 8%.