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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (9137)	10/29/1999 1:44:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Orchid chemicals & Pharma: Plans for growth & diversification orchidpharma.com V R Radhakrishnan in Chennai: (indiainfocom) The Chennai based Orchid Chemicals and Pharmaceuticals expects its sales and profits to triple by 2003. Last year the company recorded a turnover of Rs 330 crores. Orchid is the country's largest manufacturer and exporter of cephalosporin bulk drugs. Orchid now plans to diversify into other areas like non-cephalosporin bulks and formulations. The company had recently placed over 10 million shares with Schroder Capital Partners Limted (SCPL), part of the Schroder Venture group. Schroder also runs a life sciences fund based in Boston which is focused on investing in healthcare and pharmaceuticals. The Rs 175 crore deal that Orchid has struck with Schroder's is one of the largest private placements by any company in a non-core sector in the country. As per the agreement, Schroder Capital Partners will pick up over 10 million shares at a premium of 154.27 rupees. That would form around 38 per cent of Orchid's equity. The promoters stake will now go down from 45.2 per cent to 28 per cent, while the holdings of financial institutions and public will go down to 33.9 from 54.8 per cent. Says K Raghavendra Rao, managing director of Orchid Chemicals and Pharmaceuticals, "We see the value addition in two parts. One is the monetary part which will help the company propel forward, doing the projects and products that we have envisaged. The second value addition I expect from this kind of an investment partner is the additional contacts in the international market, especially in regulated markets like the US and Europe. They can put us in touch with the right people." Orchid will spend around Rs 9 cr to further expand its cephalosporin range of bulk drugs. The company will add five more new products to its existing range of 14. But the bulk of the investments will go into new areas. "We have 2-3 areas of growth. About 30 per cent of the investment will into non-cephalosporins. Here we will look at anti-ulcers, anti-virals, macrolides and other new products. Another 30 per cent will go into the formulations business. The balance will be split between R&D, international marketing and long and shirt term working capital requirements," says Rao. By 2003 Orchid expects both non-cephalosporins and formulations to contribute one third of its total revenue of Rs 1000 crores. The remaining one third will continue to come from its cephalosporin range. Says S Krishnakumar, vice president research of Anush Securities, " We expect the risks to be reduced once they diversify. Formulations is a very profitable business once they reach a critical mass like Rs 50 crore. On a long term this would also help them improve their margins." The other area that Orchid is actively looking at is sprucing up its R&D business where work has already begun on new drug delivery mechanisms and developing new polymer based adducts. Around Rs 20 crore will be invested in Orchid's R&D. "I believe that people are more important than money. I have 65 scientists with me. They don't cost me 10 per cent of my turn over. But they add 80 per cent of the value to the company. Whatever products we have taken up we have a process which is different from others, which has given us the highest gross operating margins consistently over the last five years. That has come only because of continuous innovation. We do the research in terms of substitution of molecules and substitution of raw materials and going in for cheaper processes. But we are now going to make a shift from this kind of an applied research to new chemical entity identification and combinational chemistry and polymer based adduct combination in which we have already filed a few patents in the international market." However analysts feel that it may take while before Orchid can emulate the success of other domestic pharma companies like Ranbaxy and Dr Reddy's. "Orchid is already a strong player in chemical synthesis. It is one of the best companies in India and I expect the company to continue to be strong in those areas and introduce new varieties in the cephalosporin and non-cephalosporin family of bulk drugs . But I don't see the company really getting into hard core R&D in terms of molecular discovery and drug delivery in the near future," says Krishnakumar. The other area that the Orchid is looking at is to enter into long term supply contracts with multinational pharma companies for bulk drugs. "We are working very closely with some people in the US and Europe. I would imagine that in the next 6 to 9 months we would be able to come out with concrete tie-ups with respect to products and projects which will take Orchid to the next millennium with a lot of confidence," says Rao. The US FDI approvals are expected to be in place by early 2000. The deal with Schroder has had its impact on Orchid's share prices as well. The stock has been regularly touching the upper ceiling ever since the deal was announced. Analysts feel that the stock which has been languishing in the 140 - 180 rupees range over the last few months, could now get a re-rating.

To: Mohan Marette who wrote (9137)	10/29/1999 5:32:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

L&T clocks net profit of Rs 167 cr($37 mil) in first half larsentoubro.com LARSEN & Toubro (L&T) has reported a decline of 16.03 per cent in net profit to Rs 166.9 crore for six months ended September '99 from Rs 178.71 crore reported in the corresponding half, last year. Turnover for the period is higher by 7.28 per cent to Rs 3,317.68 crore ($737 mil) from Rs 3,092.95 crore ($687 mil). Net profit for September '99 is lower as the corresponding period last year includes extraordinary profit of Rs 76 crore ($17 mil) from sale of ships. This is much higher than the extraordinary profit of Rs 12.69 crore for six months ended September '99.