The saga of excellent performance continues at Orchid Chemicals and Pharmaceuticals Ltd. Rarely has a four year old company emerged as one of the top four global players in a particular field. Orchid Chemicals and Pharmaceuticals, which started off in 1993-94 with a 100 per cent EOU, today commands a 15 per cent share in the global market for antibiotic Cephalosporin. The company's strategy to focus on the export market for this high value antibiotic seems to be paying off and has taken it to a position of one among the top four oral cephalosporin suppliers. What is more, Orchid does not have to bother about drug price control order (DPCO) like all other pharma companies because of its 100 per cent export status.

Orchid has zoomed past its projected targets. While it has attained sales which are almost twice the projections, net profit is two and half times the target figure for 1996-97. Also, the sales turnover is up 72 per cent to Rs 193 crore while net profit has shot up by 76 per cent to Rs 30.65 crore. Though net margin remained stagnant at 16 per cent, operating profit margin improved remarkably from 22 per cent to 27 per cent.

Within a short span, the company has achieved a major feat and can boast of robust figures. Return on net worth firmed up consistently for three years from 13 per cent in 1994-95 to 27 per cent in 1996-97. The earnings per share leapfrogged from Rs 6.72 to Rs 17.67 over the same period.

Orchid Chemicals won Industrial Economist Business Excellence Award for 1997 for its financial performance, commitment to business and environment and fast growth in a short period of four years. Last year, it was awarded the ISO 9002 by KPMG Quality Registrars.

The investors responded to this growth stock and the scrip started its upward journey from Rs 35 in 1993-94 to a high of Rs 128 in 1994-95. After a decline to Rs 60 in 1995-96, it crossed the Rs 128 mark to reach Rs 145 and is currently is hovering in the range of Rs 130-135, discounting the latest earnings 7-8 times.

The company will continue to consolidate its position in the world market and concentrate development efforts on sterile bulk drugs whose patents would expire by 2005. Through better solvent recovery, backward integration and process optimisation, the company achieves a high degree of efficiency and economies of scale.

Besides various cephalosporins, it manufactures drug intermediate 7-ADCA. It is implementing a Rs 70 crore plan to manufacture sterile cephalosporins, viz, 60 tpa cefazolin, 5 tpa cefazidime and 5 tpa cefoperazone. Targeting these too for the global market, the company endeavors to remain competitive and withstand pricing pressures abroad.

Last year, Orchid doubled its oral cephalosporin capacity to 300 tpa and commissioned a 30 tpa sterile cephalosporin plant - an area where it plans to concentrate. The company made a private placement with FIIs at an average price of Rs 151 in 1994, a preferential offer to promoters at Rs 88 and came out with a right issue at Rs 40 in March 95. Despite the company's success saga, its share is yet to cross Rs 150, at which FIIs subscribed to the private placement.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.