Orchid Pharma to convert rupee term loans to foreign currency loans

The company expects to see profit next year

Orchid Chemicals and Pharmaceuticals Ltd (OCPL) is planning to convert most its Rupee term loans of over Rs 1,500 crore into foreign currency loans, in order to save the higher interest paid at present. The company, which has a debt level of Rs 3165 crore and going through a Corporate Debt Restructuring (CDR) process at present, is expecting to breakeven next fiscal year, said K Raghavendra Rao, founder and managing director of OCPL.

"The total debt is of around Rs 3,100 crore, in which we have Rupee term loans, foreign currency loans and working capital. Rupee term loans including funded interest term loans are about Rs 1500 crore. We are looking for conversion of at least Rs 1,000 crore immediately and the goal is to convert the entire Rs 1,500 crore," said Rao in the sidelines of the company's annual general meeting today.

 

The total debt of the company is around Rs 3,100 crore, out of which Rs 750 crore is foreign currency loan equivalent, Rs 500 crore is working capital and remaining Rs 1,800 crore is Rupee loan, which has the Rupee term loan including the funded interest of working capital and term loan, he said.

The foreign currency loans entails a lesser rate of interest and we have a natural hedge since has exports. The Rupee loans are costly at around 11% in CDR while the foreign currency loan has an interest of around 4.6%. The interest difference itself is around Rs 120 crore which the company could save, if all the Rupee loan is converted. This money will go back to the lenders as repayment of the principal loan. He said that the existing lenders would replace the Rupee term loan with the foreign currency loans.

The company is looking at returning back to profit, with the new product launches in the regulated markets, additional capacity utilisation and the completion of balancing equipment will give it the potential to grow by 40% next year combined with the Rupee term loan conversion to foreign currency. This is expected to bring the company's balance sheet back to black, he said.

The company expect at least 40% growth next year compared to the current year.

The company is building up a sterile Active Pharmaceutical Ingredient (API) plant for cephalosporins, which is expected to be completed in this year and the benefit out of it would come out next year. The facility has a capacity of 30 tonnes per annum and in terms of value, and it is expected to add around Rs 150 crore to the topline. The efforts to complete the other projects would also be fruitful, he said. At present it has a sterile manufacturing capacity of 50 tonne.

The company is also expecting its clinical trials on drug candidates for Nonalcoholic Steatohepatitis and Non Alcoholic Fatty Liver Disease. "We are undertaking Phase II trials in Malaysia now and we expect to complete in one year and after that we expect to license it to a larger company," he added.