Even as the Ranbaxy group made it clear that it wasn?t interested in hostile takeovers, the group?s presence in the Orchid Pharmaceuticals case on two separate occasions is now the topic of intense discussion in market circles.
In the first instance, that of Orchid promoters hiking their stake, it was Religare Enterprise, the financial arm of the Ranbaxy Group, which was in the picture as those responsible for providing margin funding to the Orchid promoters. In the second instance, it was Solrex Pharmaceuticals, reported to be a related firm of the Ranbaxy group, which mopped up Orchid stock from the open market, leading to intense speculation about a possible takeover of the company.
The plans of the Orchid promoters to hike their stake in the company failed in March this year, following the failure of Bear Stearns globally, as the local arm of Bear Sterns offloaded Orchid stock along with its holdings in 25 other Indian companies. The Orchid promoters had jacked up their holdings in the company from 17% to 24% during this time. They had entered into a margin funding contract with Indiabulls and Religare. However, following offloading by Bear Stearns, the Orchid stock price fell and to that extent, the Orchid promoters had to sell their stakes in the market to maintain the margin account with Indiabulls and Religare. The Orchid stock ended to its four and half year low at Rs 113.60 at that time.
How does Orchid view this twin presence of Ranbaxy in the context of the Solrex mop-up operation? When contacted, K Raghavendra Rao, MD, Orchid Pharma, said, ?The two transactions, one of margin funding by Religare and the second one of Solrex picking up a stake in Orchid, have to be seen as separate and independent transactions.? The spokespersons from Religare and Ranbaxy group could not be reached for comment. By Thursday, the stock had dipped by another 4% to close at Rs 228.70 on the Bombay Stock Exchange .
The heavy trading volume on the back of a possible hostile takeover battle, the sudden crash in the stock price, the involvement of the same group entities are now the talking points in the market.