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Chennai-based Orchid Pharma has sought shareholders’ approval for a related party transaction with Otsuka Chemicals (India) Pvt Ltd.
On Tuesday, Orchid Pharma filed the notice of its 30th annual general meeting to be held on August 9. In its notice, Orchid Pharma sought shareholders approval to purchase a key raw material from Otsuka Chemicals, a material subsidiary of the company, up to a maximum of ₹250 crore for FY24.
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As per Regulation 23 of SEBI’s listing regulations, shareholders approval through resolution passed at general meeting is required for all material related party transactions even if they are entered into in the ordinary course of business and on arm’s length basis.
A transaction is considered “material” if the total transactions during a financial year exceeds ₹1,000 crore or 10 per cent of the annual consolidated turnover of the company as per the last audited financial statements, whichever is less.
Orchid Pharma said Otsuka is the only approved source of the key raw material ‘GCLE’ for the company even before the takeover by Dhanuka group.
“It is only incidental that after Dhanuka’s takeover, this transaction has become a related party transaction by virtue of Manish Dhanuka, MD of Orchid Pharma Ltd is also a Director and member in Otsuka Chemical (India) Pvt Ltd and Mridul Dhanuka, Whole Time Director is a Member of Otsuka Chemical (India) Pvt Ltd,” the notice read.
It is to be recalled that Gurgaon-based Dhanuka Laboratories took over debt-ridden Orchid Pharma through a corporate insolvency resolution process in June 2019.
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The notice to shareholders further said, Otsuka also buys the end product produced from GCLE for its global requirements from Orchid under a long-term supply contract. “The proposed related party transactions with Otsuka will help the company achieve economies of scale,” it added.
The company has also sought shareholders nod to shift the company’s registered office address from Chennai to its plant location in Alathur near here, and managerial remuneration to Orchid Pharma MD Manish Dhanuka and Whole Time Director Mridul Dhanuka among other items.
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