Orchid Chemicals and Pharmaceuticals has reported a net profit for the quarter ended September 30 due to extraordinary gain from transfer of the Penicillin and Penem API business.
After adjusting for the extraordinary gain of ₹319 crore from transfer of the business and the facility located in Maharashtra to Hospira Healthcare India Pvt Ltd as per an agreement arrived at in 2012 the company has shown a net profit of ₹272 crore for the quarter.
Accounting year extendedThe Chennai-based pharma company has, however, reported a net loss of ₹47 crore from routine operations, against a loss of ₹200 crore in the comparable previous quarter. The turnover for the quarter dropped to ₹175 crore (₹380 crore).
According to a regulatory filing, Orchid Chemicals has extended its current financial and accounting year by six months to March 2015, to fall in line with the new Companies Act requirement.
In its report, the company’s auditing firm has said Orchid Chemicals has given advances amounting to ₹600 crore to various parties and these are outstanding till date, and it could not take delivery of materials from them due to financial constraints. The report also says that it has investments of ₹95 crore and loans of ₹34 crore in a wholly-owned subsidiary, Bexel Pharmaceuticals Inc. The subsidiary has not spent any money on research as there is no financial support from the parent firm. In view of this, it is necessary to impair the value of this investment as no information is available with Orchid Chemicals regarding the value that can be recovered from the sale of rights over the molecule possessed by the subsidiary.
K Raghavendra Rao, Managing Director of Orchid Chemicals & Pharmaceuticals, told BusinessLine that the company will start the recovery process in the following quarters. With the implementation of the approved corporate debt restructuring package, operations are getting streamlined with the infusion of working capital into the system, he said.