Orchid promoter to get FI support

K Raghavendra Rao, the promoter and the managing director of Chennai-based Orchid Chemicals and Pharmaceuticals Ltd, has managed to garner the support of large institutional investors to thwart a takeover attempt.

These institutions, which collectively hold 38 per cent in Orchid, have agreed to support Rao, company insiders told Business Standard.

"These are oral agreements and are usually not given in writing," he said.

Counted with the 16 per cent held by Rao, his family and close associates, this will keep Orchid safely under Rao's control.

Solrex (believed to be a company of the Ranbaxy promoter group), is known to have bought 12 per cent in Orchid so far, which is being seen as the first steps towards a hostile takeover of the company.

Life Insurance Corporation of India and United India Insurance Company hold 7.8 per cent and 2.48 per cent respectively in Orchid.

Other large institutional investors in the company include Gazal Industrial Holdings (8.48 per cent), Macquarie Bank (5.13 per cent), Harpline (4.54 per cent) and, Fidelity Trustee Company (2.66 per cent).

Industry observers said the large number of abbreviated new drug applications (ANDAs) filed by Orchid is one strong reason that might have motivated Solrex to take over the company.

These approvals allow companies to launch generic clones of drugs once the patent expires.

An Orchid spokesperson said the firm has 25 approved ANDAs and another 22 are awaiting approval by the US Food and Drug Administration.

The spokesperson also denied reports suggesting that Rao had roped in Prathap C Reddy, chairman of the Apollo Hospitals group, as a white knight to retain his control over Orchid. The hospital group's spokesperson could not be reached to corroborate this.