Orchid Chemicals Posts Profit While Revenue Declines

Debt ridden Orchid Chemicals has posted a profit of nearly Rs 272 crore in the quarter ending September 30, 2014 as compared to a loss of Rs 200.34 crore in the corresponding period in 2013.

However, the company has registered a decline in its revenues by Rs 205.48 crore, from Rs 308.47 crore in September 30, 2013 to Rs 174.99 crore in the corresponding period in 2014.

“The company has given advances amounting to Rs 596.27 crore to various parties and is outstanding as on September 30, 2014. The company has not received major materials or capital goods from the time these specific advances were given… the company is not able to take delivery due to financial constraints. We are not able to express any opinion on the recoverability of this amount,” the auditors said in their Limited Review report.

According to them, “The company has an investments of Rs 94.82 crore and loans of Rs 34.25 crore in a wholly owned subsidiary Bexel Pharmaceutical Inc. The subsidiary has not been spending any money on the research on the molecule during the current period as no financial support is being given by the parent company… In view of the above, it is necessary to impair the value of investment as no information is available with the Company regarding the value that can be recovered from the sale of rights over the molecule possessed by the subsidiary.”

Orchid Chemicals has received an approval for Corporate Debt Restructuring (CDR) package in March 2014. However, the company still has not received final confirmation of balances from some banks and institutions pertaining to the loans and interest funded. Nevertheless, the company has successfully the transfer of business to the global pharmaceutical giant Hospira in July 2014.

“With the implementation of the approved CDR package and the completion of business transfer to Hospira, the operations are getting streamlined with the infusion of working capital into the system. We are confident of the rebuilding process and hope to generate value to the stakeholders in the ensuing quarters,” said K Raghavendra Rao, managing director of Orchid Pharmaceuticals.

It should be noted that the company has been reeling under a debt of nearly Rs 940 crore and was among the top 50 defaulters.