"We will whittle down our nutraceuticals business but will not wind up the company," says Orchid Chemicals deputy managing director Dr C Bhaktavatchala Rao. "Such products are generally sold on a mail-order basis, and it is a difficult market." The UK company is laden with unsold stocks and they have to be liquidated before curtains come down on Orchid Nutricare.

The company, in the meantime, posted sales of Rs 425.52 crore last fiscal, registering an increase of Rs 54.28 crore over the previous year. While the cephalosporin bulk accounted for Rs 412.73 crore, the companys formulations division chipped in Rs 22.16 crore, with the inter-segment revenue accounting for Rs 9.37 crore.

But the after tax profits plunged to Rs 6.30 crore from the Rs 35.75 crore clocked during 2000-01. The total expenditure went up by Rs 59.15 to Rs 333.65 crore. During the final quarter of the last fiscal the company registered a loss of Rs 4.11 crore on a sale of Rs 147.17 crore.

According to Dr Rao the profits came down due to the price pressures on the bulk at the international markets and the provisioning for bad and doubtful debts to the tune of Rs 11.95 crore relating to earlier years. The sticky accounts are due to exports to Far Eastern countries.

"That doesnt mean we overstated our profits for the past years; we could have waited for some more time but decided against that as a matter of precaution," says Rao. "The last quarter results are a blip on the companys radar. Realisations on our normal bulk drug came down by 5 per cent. The focus is now on selling bulk drugs like ceftriaxone sodium (a sterile cephalosporin) cefpirome, cefepime arginine and cefalothin sodium, which are not subject to price pressures."

Last fiscal the company sold 696 tonnes of cephalosporin bulk actives as against 625 tonnes sold the previous year. Specific country-wise product and customer-related activities in diversified markets like China, Latin America, Russia, the Middle East and parts of Asia Pacific have led to a strong turnover growth.

On the other hand, formulation sales are picking up and the company has now two general managers to take care of domestic and export formulation sales. The company is presently implementing a two-pronged growth strategy that will drive volume growth through branded generics and enhance revenues through new first-mover product introductions.

Several new product introductions like Cepirom (Cefpirome) and Cebanex (Cefoperazone + Sulbactum) have made a significant positive impact on the revenues, and this could further prove beneficial during this fiscal.

On the projects front, Rao says the companys Rs 40-crore formulations plant will be functional from January 2003 onwards. Similarly, this fiscal will see sterile and non-sterile bulk actives plant going on stream. "The Aurangabad plant, too, has started contributing to the top and bottomline. All this will have a beneficial impact on the company financials," says a confident Rao.

Responding to the query about the rising trend in the interest outgo, he says the money raised from investors was spent on projects and this has resulted in the increase. Last fiscal the interest payout was Rs 31.41 crore as against Rs 30.43 crore.

Orchid Chemicals had got heavy infusion of funds from Schroder Capital (Rs 175 crore as equity) and from International Finance Corporation, Washington ($20 million foreign currency convertible bonds). The funds infusion, apart from financing Orchid Chemicals expansion plans, was expected to reduce the interest payout.

On the process research front, Orchid Chemical has so far filed over 40 patents for non-infringing patentable processes in the US and Europe of which as many as 20 have been filed this year. Out of these the US patent office has already granted two patents while four to six more are expected to be granted this fiscal.

In the area of new drug discovery (NDD), Orchid Chemical is engaged in developing NCE candidates in anti-infectives and pain management areas. The company is also putting up an animal house and toxicology centre that will provide a major impetus to the NDD activity.

And, finally, in order to placate the investors who have seen the market value of the scrip sliding down to Rs 70 band from Rs 450 not so long ago, the company board has decided to maintain the dividend rate of 40 per cent like in the previous year.