Orchid Chemicals & Pharmaceuticals Ltd (Orchid) registered a turnover and operating income of Rs 541.42 crore for the fiscal year ending March 31, 2003 representing a growth of 27% over the previous year's revenues of Rs 425.52 crore. Gross profit before interest, depreciation and taxes was Rs 109.63 crore compared to Rs 80.67 crore last fiscal. After providing for interest of Rs 42.08 crore (Rs 31.42 crore last fiscal) and depreciation of Rs 40.31 crore (Rs 35.82 crore last fiscal) the profit before deferred tax of the company was Rs 27.25 crore as against the previous year's profit before deferred tax of Rs 13.43 crore. Deferred tax as per Accounting Standard 22 amounting to Rs 7.71 crore has been provided for during the current year. Net profit after tax was Rs 19.54 crore as against Rs 6.31 crore for the last fiscal registering an impressive increase of 210%. The EPS of the Company increased three-fold to Rs 6.61 compared to Rs 2.25 last fiscal.
Orchid's revenues for the fourth quarter ended March 31, 2003 stood at Rs 194.96 crore as against Rs 147.18 crore for the corresponding period last fiscal. Additional capacities generated by new bulk active projects completed during the last quarter, coupled with product mix changes resulted in a higher increase in Q4 performance. Gross profit before interest, depreciation and taxes was Rs 39.78 crore compared to Rs 23.51 crore, for the corresponding quarter in the last fiscal. Net profit was Rs 10.32 crore, compared to a net loss of Rs 4.12 crore for the corresponding quarter of last fiscal.
Orchid's Board which met on April 28, 2003 to consider and adopt the audited financial results of the company for the fiscal ended March 31, 2003 also recommended a dividend of 40%. The equity capital of the company stood enhanced from Rs 27.99 crore to Rs 32.38 crore, post-conversion in November 2002 of FCCBs issued to International Finance Corporation, Washington.
“This fiscal year has been a challenging but satisfying year in our overall growth journey. During the past several months, we have been making significant strategic investments in identified growth horizons of bulk actives, formulations and drug discovery. During 2002-03 all the projects that the company embarked on made substantial progress and many reached completion. The performance in 2002-03, marked by significantly enhanced turnover and profitability, reflects Orchid's ability to manage investment imperatives and market forces of our technology-intensive businesses effectively,” said K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.
“The bulk actives business posted a record turnover during the last fiscal with superior profitability resulting from capacity generation, product mix optimisation and focused cost reduction initiatives. The formulations business has nearly trebled during the year, achieving a critical scale. With the acquisition of the speciality business of Mano Pharma, our formulations product basket covers an impressive range of acute therapy and chronic therapy products. In drug discovery, we are on the verge of confirming the efficacy of exciting new chemical entities. We hope to further enhance this robust growth performance and revenues during the year 2003-04”, Rao added.
A high point of performance in 2002-03 has been the US FDA certification for the company's flagship product, cephalexin. Further certifications by the US FDA are planned based on existing and new infrastructure. New US FDA compliant oral and sterile cephalosporin bulk actives facilities earmarked for the regulated markets were commissioned during the last quarter of 2002-2003. The state-of-the-art oral and sterile cephalosporin formulations plant coming up at Irrungattukottai, near Chennai is fast nearing completion. These new facilities would accelerate Orchid's foray into the regulated markets based on US FDA certifications. From 2003-04 onwards, the value inherent in all these new projects will thus be progressively unlocked, leading to step-function increases in performance.
During the fiscal under review, Orchid continued to maintain its strong position in the global cephalosporin markets. During the year, Orchid introduced new high-end cephalosporin molecules besides a few niche intermediates. Sale of oral bulk actives accounted for Rs 337 crore and sterile bulk actives brought in revenues of Rs 136 crore. The company sold 800 MT of bulk actives and intermediates, 14% higher than in the last fiscal (701 MT).
The formulations business achieved a major increase in performance, nearly trebling its turnover to Rs 61 crores. Acquisition of Mano Pharma's speciality therapeutic business in the last quarter of this fiscal, contributed in part to the increase.
Orchid Healthcare, the formulations division of Orchid focusing on acute therapy products, achieved a turnover of Rs 53 crore as compared to Rs 22 crore registered last fiscal, representing a substantial growth of 141%.
The division's increased emphasis on new markets (domestic and export) coupled with the introduction of several first mover products have been the primary drivers of growth. The division has also tied up co-marketing arrangements with several leading pharma majors in the country.
Orchid acquired in January 2003 the assets, brands, business and manufacturing facility of Chennai-based formulations company, Mano Pharmaceuticals Pvt Ltd (including its sister company Sali Healthcare). Mano has strong equity in the high-growth chronic therapy segments of neuropsychiatry, cardiovascular and anti-diabetic drugs as well as nutraceuticals. Mano's range of products has excellent potential in the domestic as well as export markets.
During 2002-03, Orchid made substantial progress on the joint venture front. The manufacturing joint venture in China, NCPC Orchid Pharmaceuticals is in project execution stage. The drug discovery joint venture in the US, Bexel Pharmaceuticals, has progressed its lead molecule through several studies which confirmed its efficacy and stability. The applied research joint venture in Europe has established research and manufacturing infrastructure for developing niche peptide and biotechnology products.