Orchid Chemicals to go slow on nutraceuticals

"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.