Date:17/07/2004 URL: http://www.thehindubusinessline.com/2004/07/17/stories/2004071703080300.htm

Back Orchid Chemicals suspends $75-m FCCB issue

Sanjiv Shankaran

Chennai , July 16

ORCHID Chemicals & Pharmaceuticals has decided to suspend its proposed $75-million Foreign Currency Convertible Bond (FCCB) issue on the heels of uncertainty in the global capital markets.

Orchid's Deputy Managing Director, Dr C. Bhaktavatsala Rao, said after the US Federal Reserve recently raised interest rates, and the equity market turned uncertain here, the FCCB option had lost its shine.

Dr Rao, however, added that the company continued to keep the FCCB option open because it was a good way to raise resources.

For the moment, Orchid raised resources for its projects through bridge funds and internal accruals, he said.

In the current financial, Orchid's operations are likely to be affected by the weak price trend in some of products such as Cephalexin.

The weak trend in Penicillin-G, the input for some cephalosporin products, could affect about 30 per cent of the company's products (in value terms), said Dr Rao.

Dr Rao said the company's operations would be partly cushioned against such weak price trends by the next financial year because its exports to developed markets would increase.

Tough entry barriers in developed markets tend to partially insulate existing manufacturers from new entrants and the resultant price-led competition.