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Just a few weeks after clearing an USFDA inspection, Orchid Chemicals & Pharmaceuticals is facing heat from the State pollution control board.
The company's Cephalosporin API manufacturing facility in Alathur, Chennai, has got a closure notice from the Tamil Nadu Pollution Control Board (TNPCB) citing non-compliance with regard to the disposal of solid waste.
According to Mr Ch Ram, Head-Corporate Communications and Investor Relations at Orchid, TNPCB has directed the company to mix powder ash to the solid waste so that when the waste is being transported for disposal, the odour is reduced. TNPCB also asked the company to double-seal the waste in polythene, he added.
The solid waste is disposed at a landfill 80 km from Alathur.
The company said it is in talks with the TNPCB officials and is hopeful of resolving the issue by complying with the requirements, said Mr Ram. “This is the first time Orchid has received such a notice from the pollution board. The company is confident of bringing the plant to a fully operational stage at the earliest.”
While all activity at the plant has been stopped, Orchid has enough inventory to meet demand over the immediate term, Mr Ram said.
The Alathur facility manufactures 800 tonnes of Cephalosporin API (active pharmaceutical ingredients) annually. (Cephalosporin is an antibiotic used to treat infections and inflammation.)
Asked about the possible revenue loss, Mr Ram said: “We do not see a major impact on revenues.”
Cephalosporin API contributes around 30 per cent to the company's total revenues. The company made a Rs 1,663 crore turnover in FY11.
When contacted, TNPCB did not want to comment.
Just last month, the Alathur plant had cleared an inspection from the US Food and Drug Administration. The plant, which caters to the developed markets such as the US, Europe and Japan, has been manufacturing a range of oral and sterile Cephalosporin APIs since 1994.
After tumbling to a low of Rs 235.10, the Orchid stock recovered sharply to end at Rs 249.60 on the BSE on Monday – a gain of 0.42 per cent over the previous day's close of Rs 248.55. Trading volumes jumped five-fold to 22.74 lakh shares against the two-week average of 3.92 lakh shares.
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