Orchid Chemicals and Pharmaceuticals (Orchid) has brought down its debt substantially to Rs 1,700 crore from Rs 2,700 crore in the last one year. Total debt in 2009 was much higher at Rs 3,200 crore. It was subsequently brought down to Rs 2,700 crore by September 2009. With the complete redemption of its 2005 foreign currency convertible bonds (FCCBs) on Thursday, the company said it could bring down its debt to equity ratio to 1.4:1. On Thursday, the company announced that it has redeemed the outstanding FCCBs, including yield-to-maturity, aggregating to $25.69 million (Rs 114.10 crore) on the due date, November 3. These bonds were issued in November 2005, thereby bringing down its debt further to less than Rs 1,600 crore.
When contacted, a senior company official told FE that Orchid expects to bring down its overall debt further to keep the company in a more comfotable position.
The company has paid back around $330 million worth of debt in the last one year from the sale proceeds of its injectible business to the US-based Hospira way back in December 2009 for $400 million.
This has brought down the interest cost on the overall debt in the first half of the current financial year to Rs 47 crore compared to Rs 100 crore during the same six month period last financial year.
With the profits generated in the last two quarters and taking into account its liquidity, the company would look at reducing its debt further, thereby bringing down the overall interest cost. ?It is difficult to quantify at this point of time. But we hope, we will try to bring down both the debt and interest costs further,? the official added. Meanwhile, the company expects a topline growth of 23% with an EBITDA margin growth of 21% in the current financial year. Orchid believes that its recent long-term contract with Alvogen to market its 8 high oral products coupled with its long-term association with Hospira for API, it will achieve the desired results.