Orchid Chemicals & Pharmaceuticals (Orchid) has received sanction for $100 million by way of ECBs (external commercial borrowings) from the banking system to redeem its last outstanding FCCBs (foreign currency convertible bonds) of $117 million, along with the yield-to-maturity when they fall due in February 2012.

The company, which is involved in retiring high cost debts as well as buying back the matured FCCBs, has brought down its overall debt from R3,200 crore two years ago to less than R1,800 crore as of now through sale of its formulation business to Hospira, internal accruals and funds raised at lesser rates.

?We are fully geared to redeem the maturing FCCBs. The ECB sanction that we have received, coupled with our internal accruals will enable us to comfortably redeem the outstanding FCCBs on the due date. With over 85% of Orchid?s sales being exports billed in dollars, the company has a natural hedge against currency fluctuations,? K Raghavendra Rao, CMS, Orchid Chemicals & Pharmaceuticals, said. It may be recalled that the company had redeemed FCCBs worth $25.69 million in late 2010 and these FCCBs were issued in 2005.

Orchid?s spokesperson said, ?This is the last and outstanding FCCB of $117 million. This will be met through $100-million sanction through ECB, while the company will pool in the remaining $17 million through internal accruals. Since this FCCB redemption falls in February, the company will do it at that of point of time.?

He said, ?The company do not see any major impact at this point of time, however, will end up with some sort of savings going forward. The ECB funds are more beneficial to the company as compared to FCCBs in tenure, terms and other aspects. The $117-million FCCBs are five-year old with a yield to maturiy rate of 7.27%.?

?We are firm on achieving 20% growth on top line and more than proportionate growth in bottom line in the current financial year. The overall debt has come down below R1,800-crore level of March. In the last six months or so, the company brought down the debt further and hope to reduce it further in the current financial year. Since, we have made all necessary investments over a period of time, all the future fund flows will be utilised to retire high-cost debts,? he added.