Orchid On The Prowl, Targets Acquisitions In Formulation Biz

Chennai, November 29: | Updated: Nov 30 2002, 05:30am hrs
The Chennai-based Orchid Chemicals and Pharmaceuticals Ltd is planning strategic acquisition of firms in the formulation business. The company will convene a meeting of its director board on the first week of December to finalise the strategy. A meeting of board of directors of the company is scheduled on December 16 to discuss and consider possible acquisition opportunities in the formulations business, a company spokesman, while contacted, told FE.

However, he said the company has not finalised any strategy nor has it spotted any specific firms for the buyout. The idea is still in its preliminary stage and nothing has been finalised, he added. Orchid has recently entered into a joint venture agreements with a Chinese firm for the manufacture of bulk actives in China. It had also tied up with a research start up in the US for new molecule and drug discovery. The fund for the acquisition is expected to come mainly from the companys internal accruals and the recent investment in Orchid by International Finance Corporation (IFC), Washington. IFC by way of subscribing to Orchids Foreign Currency Convertible Debentures (FCCD) last year has invested close to $20 million in the company. IFC has converted the FCCDs into fully paid equity shares at a consideration of Rs 96.41 crore recently.

According to the current shareholding pattern, the total promoters holding, including persons acting in concert, is at 20.79 per cent. Schroder Ventures of Singapore, a strategic investor in the company, holds 32.91 per cent in the venture, while public holds 32.77 per cent. IFC holds 13.53 per cent stake. The paid-up equity capital of the company post equity issue to IFC has gone up to Rs 32.38 crore from Rs 27.99 crore. Orchid had earlier said that the money raised through the issue of FCCDs would be used for part-financing some of its expansion plans and strategic acquisitions. The money was also invested in sprucing up its infrastructure facilities and technology. Orchid has clocked a net sales of Rs 111 crore and a net profit of Rs 3 crore for the quarter ended September 30, 2002.

Orchid Stock Rises 4%
The public announcement of Orchid plans to considering acquisitions on the formulation business has seen its stock move up 3.72 per cent on Friday on The Stock Exchange, Mumbai (BSE). The stock has opened at 69.80 and hit a high of Rs 73.40 and closed at Rs 72.40 making an absolute gain of Rs 2.60. Scrips 52 week high was 97.20 and its 52 week low was Rs 55. Its all time high was Rs 545.35 on October 4.